It has been way too long since my last blog, but I have been getting a lot of questions on the above and I thought I would share some quick tips. Keep in mind, I am a mortgage consultant and not a realtor, so this is just some information I have picked up over the years while working closely with borrowers and realtors.
With more houses for sale and many homeowners conscious of their current equity position, renting out your property may make sense. We believe there are a number of factors to take into consideration when making a decision and we encourage you to take a look at the tips below to determine if this option is for you.
1. Make sure it’s worth it
If you have to make do any renovations to the property to turn it into a rental property; rule of thumb is the cost of renovations has to be able to pay itself back within two years rent. Scout out local markets, get a professional opinion, and be sure you do thorough research.
2. The best way to learn is to go through the experience
As one homeowner put it, “you can read as many books as you want, but you have to experience it.” Every home is unique, and every home will reveal its own problems and potential solutions. Talk to others who have converted a property before.
3. Tag team, if you can
To use a cliché, two heads are better than one, and home-owning is no exception. Getting to your desired final product is a journey, and having a teammate to share frustrations, anxieties and most importantly, costs with is invaluable.
4. Whatever you budget, add 25 per cent
When renovating your space, despite what a professionally quoted budget says, add 25 per cent, just in case. If you don’t go over, nothing lost. But if you do, at least you were expecting it.
5. Consider all the options
If you have a three-story plus basement house, why just rent out only the basement? Doubling the space not only allows you to live mortgage-free by increasing the rent, it also increases the value of the home. But it also may not be the option for you, especially if you plan on expanding a family or you want access to your backyard.
6. Houses are like onions
The more layers you peel back, especially while demolishing, the more problems you’re going to find. Count on hidden gems like mould, live wires and any other hidden costs, just in case.
7. Make sure the space is liveable
If the kitchen has zero counter space and the bedroom can only fit a bed, not only is it going to be hard to find someone to rent out your unit, but think of the types of people who might be wanting to rent out your unit.
8. Don’t turn your house into a home…right away
If a long-term investment is what you seek, turning your space into a home right off the bat isn’t going to help pay those accumulating bills. Your No. 1 priority should be making your home into an income source, or at least a manageable entity.
9. Start on the outside
A separate entrance is key when renting out a basement, especially if you want to give your tenants privacy. And you might want to make sure there are no potential lawsuits hanging around — such as slippery stairs or rotting wood.
Thank you for reading my blog and I hope you found these tips helpful. If you have any mortgage related questions, please do not hesitate to contact us.