Are you considering renting out your house, but not sure if it’s a good idea? There are many potential benefits to becoming a landlord, but there are also a lot of risks and potential pitfalls that come with it.
Before you decide to rent out your house, consider these five reasons why it might be a bad idea. From financial risks to personal safety issues, there are many things to take into account before you make this big decision. Keep reading to learn more about the potential risks of renting out your house.
1) You’re throwing away money
If you rent your home, you are wasting money every month on rent. That money is not being utilized to pay off your mortgage or invested in a way that will generate returns or increase in value. Every month, you essentially give up all of that money and receive nothing in return. Your mortgage payments contribute to the equity in your property, making it an investment.
Even if the housing market falls, the equity you’ve accumulated in your home can help keep you afloat. Renting may be a short-term answer, but it is not the ideal long-term investment.
2) You’re paying someone else’s mortgage
When you rent a home, you are essentially assisting someone else in paying down their mortgage. Your rent is paid to the landlord, who uses the money to meet their mortgage payments. This means that, while you can live in the house, you are not accumulating equity or investing in it. Instead, you’re simply assisting someone else in making payments on a mortgage that you don’t own.
In contrast, if you own your own home, you get to keep all of the money you put into it. The more money you invest in it, the more equity you gain in it.
That equity can then be utilised to borrow against or to sell the home for a profit in the future.
3) You’re tied to one location
One of the biggest disadvantages of renting your house is that you’re tied to one location. You won’t be able to just pick up and move, since you have a contract with the landlord. This means you’ll have to break your lease and find someone else to take over the rental agreement.
That’s a hassle, and it can be very costly. It also means that if you want to travel for an extended period of time, you’ll need to either get a subletter or leave the property vacant and pay for rent in addition to travel expenses. In contrast, if you own your home, you can more easily move around and be free of such constraints.
4) You have to maintain the property
When you rent your house, you are not just responsible for yourself, but also for the property. This means that you are responsible for making sure the property is kept in good condition and any repairs that need to be done are taken care of in a timely manner.
As a tenant, you should always make sure to take proper care of the property and do all the necessary maintenance tasks. This could include things like mowing the lawn, trimming hedges and bushes, cleaning the gutters, and even painting the interior and exterior of the house.
You will be expected to keep the property in good condition and if you don’t, you may face hefty fines from the landlord. The cost of repairs can add up quickly, so it’s important to stay on top of any maintenance issues that arise.
5) You’re at the mercy of the landlord
When you rent your house, you are essentially giving away control of it to the landlord. Your landlord has a great deal of power over you, including the ability to raise your rent or evict you if they so choose.
You also have no control over the repairs or maintenance that need to be done on the property, as those decisions rest solely with the landlord. Even if your lease gives you some protections, these are not always enforced and your landlord could potentially take advantage of you if they wanted to.
Furthermore, if you ever wanted to move out of the property, you would still be beholden to the rules set by your landlord and would have to abide by their wishes in order to do so. All of this means that when you rent a house, you are essentially at the mercy of your landlord and whatever terms they set.