Expert Tips: How To Rent Out Your House And Buy Another

Renting out your current home and moving into another one is a great way to earn a passive income while investing in a new property. As long as the monthly rent check you get covers your mortgage, you’ll be making a profit. You might want to rent it out until the sale prices increase to a more favorable point. No matter what your reasons are, here are some expert times on how to rent out your house and buy another.

Check the Terms of Your Mortgage

Although it’s possible to rent out your house while having an existing mortgage, not all loans will allow it. Check the terms to see if you have to wait a certain amount of time before renting. You can also try refinancing with another mortgage company that will allow you to rent out your property. Don’t start looking for a second home before you’ve gotten pre-approved by your mortgage lender. You’ll have a better idea of what kind of house you can afford and not overextend yourself financially.

Determine If you Can Afford a Second Home

You should make sure your finances can handle having a second mortgage before you purchase another home. While you could potentially make enough money from renting out your first property to cover one of the mortgages, there are no guarantees. If there are periods where you don’t have tenants or have to cover repair and maintenance costs, you need to be generating enough income so that the second property won’t put you in debt.

Figure out How you Want to Manage Your Tenants

If you’re going to be a landlord, you have to make sure you have a system in place for managing your tenants. You can do this yourself if you move nearby, but if you decide to move to Arizona while your rental property is located in San Jose, you might want to consider hiring a property manager based in California. Browse the property management company’s website to get an idea of the kind of services they offer. They can help you with pricing, marketing, screening potential tenants, facilitating communication with them, and collecting rent.

Know the Market

It’s a good idea to talk to a local realtor about getting a second property and renting out your first home. They can tell you if the rental market is strong and how much you could charge for your property. You don’t want to take on a second mortgage, only to discover that you won’t be able to get enough from a renter to cover one of them. You’d end up losing money instead of making it. There are also numerous tax laws that might affect you, so research the information or consult with an accountant. They can help you make sure you don’t overlook something important that could cost you down the line.

Prepare Your House

Once you’ve decided to rent out your house, you need to get it prepared for the new tenants. This means cleaning it up and repairing issues ahead of time. If there’s a leaky faucet or damage to the floor somewhere, you’ll want to fix them before you start renting the house out. New tenants will usually have to do a walkthrough with you or a property manager to inspect the shape the house is in, and you’ll end up having to make any necessary repairs anyway. However, if it looks like there’s a lot of work needed, it might turn potential renters off, so you’ll have an easier time getting someone in if your home looks like it’s already move-in ready.

Draw up a Lease Agreement

You need to have a lease agreement prepared before you can start renting out your home. It needs to be signed by both you and the tenants, detailing everything that’s expected from both parties. The lease should include things that are your responsibility, like maintenance and repairs, as well as how much they’ll have to pay you each month and when they need to make the payments. You can talk to a lawyer to help you draw up an agreement that will protect you legally and ensure you won’t have problems with the tenants if something goes wrong.

Being a landlord is a great way to make money if you handle things properly and understand the risks involved. Real estate markets have their ups and downs, so try to list your property when the prices are on the rise. Keep these tips in mind when renting out your house and buying another one, and before you know it, you’ll be generating additional income every month. It’s a great investment. Just make sure you do it right.