Should You Rent Your Arizona Home?
Has this thought crossed your mind: if you found the job of a lifetime in another state or your current company transferred you, should you sell or rent your home? It can seem exciting and overwhelming since there are many factors to weigh before making such an important decision, here are some things to think about.
First, think about reasons that are important to you for keeping ownership of the home. Do you like the home so much that you want to hold on to it in case you ever move back? Are you looking tax breaks through property depreciation? Do you want to use the home as a basis for a retirement investment?
All of these reasons make sense for retaining ownership, but there are some factors to consider that may outweigh the perceived benefits. For instance, are you prepared to be a long-distance landlord, hiring someone to maintain and manage the property for you? There are many other costs involved as well, such as advertising costs, turning costs (cleaning and painting between tenants or heaven forbid a remodel), property taxes and insurance, utilities paid when your property is vacant, and accounting / legal costs. In order to properly assess these costs, you should research the numbers and facts in your market. Expenses often run about 30 to 40 percent of income before the monthly mortgage cost.
Property Rental 101
If you’ve come to the conclusion to rent out your home, where is the best place to start? First, in order to get top of the market rent it is important that your home is in top shape. This includes, but is not limited to, interior and exterior patching and painting, carpet cleaning or replacement, appliance tune-up and cleaning, assessing your home efficiency in order to cut down on utility bills, and fixing whatever needs fixing. These steps are important so that you have a satisfied tenant and lower maintenance costs.
Then, evaluate the rental market to set the rent accordingly. Review any local ordinances and your HOA about rental rules and registration. You can contact a property management company to research prices in your area, or you can review online listings to get a baseline. If you set your price too high, it’s unlikely that you’ll find a tenant. If you ask for too low a rent, prospective tenants will wonder what’s wrong with the place, and you will be not optimizing your return on investment.
Should You Hire a Property Management Company?
It may not be absolutely essential to hire a property manager, but it can make your life a little easier, especially if you are moving out of the area. Interview at least three different companies, and be sure to ask about accreditation, experience, customer service, references, tenant screening, vacancy rates, maintenance, monthly reporting, eviction handling, insurance, fee structure, property inspection, and any special services they offer. If you decide to go it alone, ensure that you review local laws and the landlord tenant act to comply with tenant rights. It is suggested that you consult with an attorney to put together a lease and review any liability you may encounter.
Questions?
Reach out to our local experts on market updates and advice that may assist you in this very important decision. We are always available to discuss!