Information to help you decide if you want to rent your house.

Renting your House, is it the right Option?

If you can’t sell it, rent it, right?  Before becoming ‘an accidental landlord’ consider the costs and benefits carefully.  Many homeowners rush into the decision to rent their home or townhome without accurately evaluating the costs.

First, add up the costs of  your home for a full year.  Include your mortgage payments, taxes, association dues and other items such as lawn care or shoveling contracts.

Next, find out the going rental rate for homes in Savage, Prior Lake, Lakeville, Farmington, Eagan, Apple Valley, Burnsville or Rosemount .  Start with Craigslist and websites like Trulia.com, browse like a renter to get an idea of rental rates on property like yours.  Take note of the properties you see advertised week after week, they are likely asking too much.

We have rented out several homes and townhomes in the past year. Single family homes with 4 bedrooms can rent for $1400 to $2400.  Call or use Ask a Question if you would like my opinion of the rental amount you can charge for your property.

A Complete List of our Rental Services

Calculate the total revenue using the monthly rental amount times 10 or 11 months.  Do not use a full 12 months of rental income.  If you rent your South of the River home or townhome for 3 years, there will likely be 3-5 months of non payment from various renters.

Most importantly examine why you wish to rent out the home.  There are good reasons to rent your property, and strong reasons against it.  If you rent your home to wait for housing prices to go back up, be prepared to rent the home for 4-6 years.  If you are waiting for value to return, plan on minimal appreciation staring in 2013, at about 3% per year.  If your home is listed and has not received an offer, it means the current value of your home is lower than the list price.  Start about 5% below your current list price and add 3% per year.  How long will it take for your home to appreciate back to the value you desire?

Each year of renting your South of the River home might bring in some revenue, however when I calculate this rental option for clients it often costs the homeowner hundreds or thousands of dollars per year.  Budget for new carpeting, flooring, fresh paint and some appliance replacemnet when you finish renting the home.  On average, plan for $5000-$7500 in repairs before selling a home after renting it.

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