By Dayv Morgan
Many homeowners in Maricopa have considered keeping their home as a rental property or buying a second home as an investment.
Mostly without apartments and duplexes at this time, Maricopa in particular has a strong demand for rental homes, keeping the monthly rates moving upward.
The ideal situation is to own property that more than pays for itself. This will give you extra income when you are retired or between jobs. But even if you just break even, you are building equity as the market increases.
If you have a second home that sits vacant most of the year, you may want to consider leasing it as a vacation rental. Your house would be under the eye of someone with a vested interest in keeping it free of insects, rodents and other invaders and you will quickly know when there has been weather or criminal damage. Check with your HOA to see if there are any restrictions with short-term rentals.
Although becoming a landlord has its advantages, there are some disadvantages that should be weighed carefully.
Each time a tenant moves out there will be cleaning, maintenance, and repair costs. A security deposit averages one month’s rent amount. If you have to replace damaged carpet and repaint the interior it will probably cost three to five times that amount, leaving you with a significant shortfall to cover.
Tenants inevitably cause more wear and tear on your property. As the owner, you are also responsible for ongoing repairs, such as the HVAC system. It’s common to see the air filters go unchanged for the entire 12 months of the lease. This puts extra stress on the system and shortens the lifespan, with potential repairs costing thousands of dollars.
Beyond maintenance costs, you must also budget for insurance, legal fees, advertising or leasing fees, accounting, and possibly a property manager. If you are able to manage the property yourself, that will save you some monthly expense, but owners often live far from their rentals and cannot visit the property often enough.
At some point, you will likely have bad renters. They may lie on their application about their employment or the number of occupants. They may ignore stipulations in your contract such as not having pets. They may cause serious damage to your home and walk away. They may cause you headaches or fines with your HOA. They may simply not pay their rent. The eviction process will cost you additional time and money.
Before renting, take your time to figure out the worth of your home and whether renting or selling is in your best, long-term interest. Putting your property into the hands of others can be stressful, but it can also be a great source of supplemental income, and hiring a property manager will help the process to go much smoother.
Dayv Morgan is a Maricopa Realtor and owner of HomeSmart Success.
This column appears in the September issue of InMaricopa.