Thinking of renting out your house? Don’t do it on a shoestring!
There are many reasons why somebody might consider renting out a house. Perhaps they are stuck with a mortgage they can no longer afford. Maybe they need to move to another area but due to circumstance you are unable to sell your current home. These are just 2 circumstances where renting out your house may seem like a good – or even the only – option.
Though the reasons for renting out a home outlined above are perfectly reasonable and worth considering, there is still a word of warning here. You need to ensure that you are financially prepared for the unexpected. Renting out your house is not as simple as working out the figures of how much your mortgage is and how much the rent will be. No, you have to make sure that you can afford to maintain the property if things go wrong.
I wanted to write about this today as a friend of mine has run into trouble this week with a property that he rents out. Basically he has discovered that the back wall on a house that he rents out is pretty much caving in. It is not about to fall down imminently, but if it were to be left much longer then there is a strong chance that it would do so in the not so distant future. As you can imagine, this is not a cheap fix. The problem is going to require a great deal of expenditure to remedy and as yet, there are no guarantees that his insurance company will pick up the tab.
I feel that this should be a warning to all those who are thinking of renting out a property to alleviate some short term strain, but who do not have much of a financial cushion behind them. There are many things that could go wrong when you rent out a house and the example outlined above is just one example. What if the boiler were to break down? Could you afford the repairs or the insurance to cover this? What if the roof were to need replacing, could you cope with this expense? We then have the obvious problem of a tenant not paying their rent. Sure, you may be able to insure against these eventualities, but at what cost?
The aim of this post is not to discourage people from renting out a property. After all, people have rented out their houses for years and most people are able to manage it. But it is certainly worth thinking about the possible financial drawbacks, and whether you could afford to deal with these if they were to present themselves. Property rental definitely brings with it a degree of risk and it would be more than helpful if you were financially able to cope with these risks if they were to materialise.
So if you are thinking of renting out your home, it would be wise not to do it on a shoestring budget. If you are going to do this, then be sure that you do your research and have the best possible insurance in place that you can afford, to mitigate as many of the potential risks as you can.
Have you ever rented out a property? If so, what advice would you give?