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Renting Your Home: Is Being a Landlord Right for You?



Article  
Renting Your Home: Is Being a Landlord Right for You?
[12/10/2004]

Source: Arlene Hull for LIFELines



    You've bought your home, decorated it, planted a garden — maybe even seen some flowers bloom — and now you have reassignment orders. You think you'd like to hold on to your home and place it on the rental market. But think well before you decide that being a landlord is right for you.


    One of the first questions is about the real estate market in your community. If the market is booming and you stand to realize a profit by selling, that could be enough to make your decision. But the other side of the coin would be a slow market in which your home might not sell for awhile. Do you want to keep your home as an investment? You could use the rental to build equity in the property before you eventually sell it. Do you plan to return to the area someday? This could be your retirement home or a temporary base while you buy or build a retirement home.


    Finding Good Tenants
    Finding the right tenant can be less stressful with the aid of the Navy's Rental Partnership Program (RPP). Your base Housing Welcome Center provides services for both property owners and tenants. They can help you locate financially prequalified tenants, and provide other services such as electronic fund transfers for rent payments.


    Getting Good Rent
    If you're able to collect enough rent to cover your mortgage, insurance, property taxes, management fee, maintenance costs, and repair bills, you'll have additional income to report on your federal and state taxes. If the rent doesn't cover all that, you'll have a rental income loss to report. The IRS has rental income and loss schedules, and other tax information. You should also be prepared for times when your property might sit empty and you wouldn't collect any rent.


    Providing Good Management
    If you choose to be a managing landlord, you'll be making all the decisions yourself. Some areas have regulations regarding who can manage rental property, and some require special permits, licenses, and inspections before placing property on the rental market. You also need to know the regulations regarding how you handle security and other deposits that you collect from your tenant. Check with a local property management company or your Legal Assistance office to see what requirements pertain to your area.


    Rental Housing On Line has extensive information on the rules governing rental property, the tenant-landlord relationship, tenant rights, and more. The site contains links for all of the 50 states, plus international landlord-tenant relationships.


    Are you handy with tools? Can you do household repairs and maintenance, or do you know licensed contractors to call? If you're the managing landlord, the tenant will call you when the toilet clogs, when the water heater quits or the furnace breaks, when the roof leaks or a pipe freezes — at times the complaints will be nonstop. If you can't handle these problems, consider hiring a property manager.


    What would you do if you're relocated far away and can't screen new tenants or check on repairs and maintenance? If you're deployed, you'll need someone to step in when you're gone. Be sure to provide this person with a special power of attorney so he or she can legally act on your behalf regarding your property. You may decide to hire a management company at this time.


    It's a good idea to talk with several different property management companies before deciding on one. (And do check them out now — a sudden deployment might give you very little time to settle your affairs.) Although as a rule you'll pay 10 percent of the monthly rent as a management fee, every company is different. The saying "No one will take care of something as well as you would" is probably true here. And no one else will make exactly the same decisions you would, so make sure you're comfortable with all aspects of your contract with them.


    If a dispute arises between you and your tenant that you can't settle to your mutual satisfaction, you may need professional advice. Because extensive federal and state laws protect both tenant and landlord, your Legal Assistance office or the Legal Information Institute are useful places to find answers.

    Whatever you decide regarding renting out your home, it will be a better decision if you take the time to research your options.

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