Even if you’ve never planned on becoming a landlord, circumstances can sometimes force you to consider renting out your home. We look at the advantages and disadvantages of becoming an accidental landlord.
While you may not have envisioned becoming a landlord someday, there are certain situations in life where the need to rent out your home may arise.
According to Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, this can sometimes occur in the event of a homeowner needing to relocate for work purposes or if they are currently experiencing financial distress.
If the intention is to keep your home, then letting out your property may be a practical solution worth considering.
However, Goslett adds that it is important to first acknowledge the advantages and disadvantages of renting out your home, before choosing the option best suited to you.
The advantages of letting out your property:
1. The extra income can offer financial relief
Leasing out your home allows you to generate extra cash through a rental income.
Should the income be sufficient to cover your expenses, it has the potential to bring financial relief as the extra cash can be used towards your home’s bond repayments, as well as any additional household expenses which you may have found difficult to take care of.
According to Goslett, even in the instance where the money received is not enough to cover everything, it will provide some financial relief for homeowners who need to pay for a bond and possibly a rental on another property as well.
2. Your property won’t be left unoccupied
While a tenant living in your home can be a risk factor, in some cases it is better to have a tenant in the house rather than have your property left unoccupied.
Leaving your home vacant can come at a greater cost as the property can become a target for thieves, vandals or squatters. This is especially if you are out of town or living in another province and can’t watch over your home on a regular basis.
Having the right tenant in your home can help to provide some protection to the property and they can also assist in maintaining it.
3. The tenant could be the future buyer of the property
Should you decide to sell your home at a later stage, there is a possibility your tenant may want to purchase it.
According to Goslett, the tenant may have been renting while they were saving for a deposit or to cover other costs associated with a property transaction and could be the ideal buyer for your home. Should this occur, the rental deposit could be used as part of the purchase deposit.
The disadvantages to letting out your property:
1. The owner may require equity to purchase another home
Renting out your home is a practical option only for home owners who have the necessary funds to buy somewhere else.
In the instance where the homeowner has relocated and intends to purchase another home, they may require the equity from their previous home as a deposit. If this is the case, then letting out the home would not be an option.
2. Certain tenants could make it more difficult to sell the home
As a property owner, it can be difficult to sell your home if you happen to have a problematic tenant.
Should the tenant not want to purchase your home, there is the chance that they may not be cooperative during the sales process, which could make it difficult for buyers to view the property.
If you happen to have a messy tenant, there is also the risk that they may not have kept the property in a good condition and may have possibly caused damage to it.
Having an unoccupied home can be a better option if you’re selling, as it would allow you to easily repair, clean and get the property ready for show days.
3. Dealing with delinquent tenants
Should a landlord make a bad choice during the tenant recruitment process, there is the risk of tenant delinquency which may cost the landlord money and/or damage the property.
Once a tenant has taken occupancy of a property it can be a long and tedious process to evict them, even if they are no longer paying their monthly rental.
If a landlord chooses to take legal action, there are additional expenses to account for, such as lawyer’s fees, which eliminates any of the benefits of renting out your home.
Landlords can however lower the risk by ensuring the necessary proper vetting and background checks for all tenant applications are completed.
4. Managing the property remotely can be difficult
Trying to manage your rental property efficiently can be difficult to do if you live out of town.
In these instances, appointing the services of a property management agent to manage your home is beneficial. A managing agent who has the necessary expertise will be able to effectively vet tenants, collect rent and ensure the property is well looked after.
“Looking at both the advantages and disadvantages will assist homeowners to determine whether letting out their property is the best decision for them in their current situation. While becoming a landlord can be beneficial, it is definitely not for everyone,” Goslett concludes.
