LANDLORD: it’s a lofty term that might sound a touch medieval. But becoming a landlord does not require displaying a family crest or handing over the keys to a castle; just the keys to the house you own! If you are thinking about becoming a landlord — that is, about renting out your house — Jacki Jesch, our broker-in-charge, offers a few points to ponder.
“Owning a house is a great asset, and we understand the desire to purchase,” Jacki says. She and the rest of the Wetzel Realty team work with expats, who sometimes choose to buy homes in the Greenville area rather than renting. When they return to their home countries, after perhaps two or three or five years, they often want to keep possession of their houses, renting them out rather than selling.
“Owners who are moving out may want to hold the house for a few years, in expectation of market appreciation, so they can sell it for more in the future,” Jacki points out. Meanwhile, they use rental income to pay the mortgage and other expenses associated with home ownership, while tenants take care of day-to-day house maintenance, utilities, pest control and lawn care.
Monthly cash flow is one obvious motivation for investment-minded owners, but another powerful incentive is the tax benefits of real estate investment. An accountant can advise you in this regard, based on your personal situation.
So how do you make the decision to rent out your house, and then transition it from owner-occupied home to rental? Ask yourself the following three questions:
1. What will the costs be?
Can you get enough rental income to cover your mortgage, insurance, maintenance costs, HOA fees, and increased taxes? Because a house that is not owner-occupied is taxed at a higher rate, your home property tax will increase significantly — typically between double and triple.
You should also factor in times of vacancy before or between tenants, expenses associated with finding tenants, and costs of routine improvements to the house, such as painting and carpet cleaning. Owners typically charge a security deposit of one month’s rent, but that is meant to cover damages only, not the normal wear and tear that come with living in a house.
To determine your monthly rental charge, research to find out what the market will bear. What are similar homes in your neighborhood renting for?
Along with the cost-counting, early in your process, Jacki recommends evaluating whether the house will make an appealing rental. “The most desirable rentals are located near schools, workplaces, and shopping, and have neighborhood amenities, such as a pool,” she explains.
Renter wish lists commonly include plenty of bedrooms and bathrooms, open floor plans, updated kitchens, hardwood floors, fenced-in yards and screened-in porches. Our international clients often prefer the Five Forks/Simpsonville area, the eastside of Greer, and downtown Greenville — although the Wetzel Realty team can show homes in any area.
2. How will I take care of the house?
This applies to ongoing, routine maintenance as well as emergencies, especially if you will not be living nearby. As the homeowner, you have to maintain the overall systems of the home (HVAC, electrical, plumbing, sewer) and whatever appliances you provide — typically the kitchen appliances, plus possibly a washer and dryer if you want to attract international clients.
Tenants have to take care of the yard, with the exception of pruning or removing large trees, but homeowners are responsible for structural aspects of the home and termite control (other pest control is up to the tenants). To help with this workload, Jacki says, some landlords hire a property management company, buy a home warranty, and/or ask a friend to help maintain the rental home.
3. How will I find tenants?
You can market the house yourself via word-of-mouth or posting in public places (online or otherwise). Fair housing laws prohibit discrimination based on race, religion, family status, and so on, but owners do have the right to disallow pets, smoking, and property alterations or additions such as pools and trampolines.
Jacki and the Wetzel Realty team would also be happy to let our clients know about your rental house if it might be a good fit for their needs, at no cost to you. Fill out our Enrollment Questionnaire to get started.
For homeowners who want full-service help with renting out their houses, Wetzel Realty offers lease marketing services on a commission basis (owners pay us only when a tenant signs a lease contract).
When you hire us to market your rental, we:
- Advise you regarding lease terms and pricing, based on comp research
- Photograph your house and write an appealing listing
- List your house on MLS, Zillow, Trulia, etc, and our own website
- Post a “For Lease” sign in your yard
- Show your house to prospective tenants
- Communicate with and vet prospective tenants, ensuring fair housing laws are followed
- Run criminal background checks and credit checks, verify income and check previous landlord references
- Generate lease paperwork and facilitate signing
- Coordinate payment of security deposit
If you are interested in renting out your house, Jacki would be happy to chat with you about how to get started. Call her at the office at 864-627-9004, or shoot an email to [email protected].
To view current listings or peruse our resources for home buyers, sellers, and renters, including our particular niche with international clients, go to Wetzelrealty.com .