If you are away from home much of the year travelling in your RV, you may wonder if renting your property to others is a good idea. You could also be considering home rental if you need to upgrade or downgrade your living space but do not want to part with your home just yet.
Whatever the situation that has caused you to consider renting your home, start by preparing a list of pros and cons. You should also have a realistic sense of the tasks you need to complete and the forms you need to get in order before allowing a tenant to live on property you currently own.
The Benefits of Renting Your Home
Although renting your home can be profitable, it is also a huge responsibility that you cannot take lightly. Here are some benefits you can expect from this arrangement when everything goes according to plan:
- You are free to keep any profit leftover each month once you apply the tenant’s rental cheque to your mortgage payment. The monthly rental cheque is yours to keep once you have paid the mortgage in full.
- You build equity in your home even while travelling or temporarily living somewhere else.
- Property rental is a passive source of income that brings greater diversity to your investment portfolio. You can sell the property for a profit later after giving the tenant appropriate notice to vacate. A rent-to-own situation might also work out well for you and your tenant.
- Having rental income each month reduces the risk of financial hardship should you face unexpected job loss or a long-term illness.
The benefits listed above are certainly attractive. However, you need to weigh them carefully against the costs and responsibilities involved before you can answer the question “Should I rent my house?”
What to Consider Before Renting Your Home
Once you have studied local real estate listings to determine how much you can charge for rent, deduct the amount you must pay towards your mortgage if not yet paid in full. You will also need to calculate these expenses and deduct them from your estimated profit:
1. Advertising: The best way to ensure that your property does not remain vacant for too long is to advertise with multiple online and offline sources. Some sources will charge a fee.
2. Repairs and maintenance: One of the most attractive benefits of renting for most people is that they do not have to complete or pay for home repairs. Renters may perform some basic maintenance tasks, such as changing a furnace filter, but most other maintenance tasks fall on you as the homeowner. Landlords typically set aside a separate account to pay for things like replacing appliances, painting the interior or exterior of the property, and cleaning and repairing the property between tenants.
3. Taxes and insurance: The government of each province sets a property tax rate that you are responsible for paying as the owner of the home. You also need homeowner’s insurance and landlord insurance, the latter of which runs approximately $80 per month. You can save money on both types of insurance by purchasing them as a bundle.
4. Tenant screening: A difficult tenant can make your life miserable with constant late payments, damage to property, or complaints from neighbours. Checking a potential tenant’s rental history, credit report, and criminal background is the best way to protect yourself from a problem renter. Each company that provides any portion of a background check charges a fee for its services.
Estimating the taxes you might owe on your rental income and checking out any tax benefits you might receive for operating a rental business are both essential as well.
As a frequent RVer, knowing that someone is in your home while you are away can provide valuable peace of mind. Even so, only you can decide whether you feel ready to make the leap from homeowner to landlord.