Pay Off Your Mortgage Faster By Renting
We’ve previously written about how to pay off your home faster. Accelerating your mortgage payments and throwing found money at your debt were the key points.
Now let’s talk about one more strategy to generate extra income: Renting.
There’s something so satisfying about having part of your investment (your home) helping to pay itself off through rental income. But it does require a lot of planning and research.
Renovating For A Rental
Most homes don’t come with a second kitchen that’s rental-ready. That means you’re probably looking at a costly renovation to get started. If you’ve ever watched HGTV shows like Income Property, you’ve seen some of what’s involved in getting your home ready.
Design and layout will be important in determining what kind of tenants you attract and how much you can charge. Remember that, unlike your own part of the house, your priority here should be on being economical. That means biggest bang for your buck, both in reducing costs and in attracting the best tenants. You need an eye on durability and ease of repairs, as tenants will never treat your home as well as you do.
Build With First Impressions In Mind
You have to see running a rental unit as a part-time job. Part of that job is managing the renos, and the other is finding and managing your tenants. The nicer the unit, the less time you’ll have to spend looking for tenants.
As with a house in general, the two most important rooms are the kitchen and the bathroom. Unlike a house, the entrance to your rental unit is also very important. If your separate entrance is in the back of your house and the pathway is covered in weeds and doesn’t have any lights, you’re probably not making the best first impression.
The easiest ways to improve this are with lights, both outside and inside the entrance way, and an attractive paint job that creates a welcoming feel.
Finding The Right Tenant
Now that your unit is ready to go (that was easy!), you have to find tenants. Finding reliable tenants can be a job and skill-set all on its own. Renting to a bad tenant can lead to lost income, property damage, and lengthy legal proceedings to force an eviction.
While it’s human nature to stereotype, don’t let your preconceptions get in the way of due diligence. You might assume that a couple will be more responsible than a single person, or that a female student will be better than a single working male. It all comes down to the individual, and it’s essential to check references.
Pay close attention to how they communicate with you as well. Every prospective tenant will ask different questions – pay attention to them and the order to see what their priorities are. If their first question is about overnight guests, you know that that’s a priority for them and can guess what that entails.
Ask questions of your own and see how they answer. Are they upfront, dodgy, or unresponsive? Always trust your gut. Don’t let a fear of not finding a tenant lead you to rent to one you know is going to cause problems later on.
But It’s Weird
Many people hate the idea of someone else living in their home. Sure, it’s a bit weird at first, but keep the big picture in mind. Not only are you paying off your home faster and creating a source of mostly-passive income (which is awesome), you also now have less space to store stuff you don’t need!
Yes, your friends will think it’s weird, but they’ll also think it’s weird when you own your home before you’re 40 and they’ve moved so many times they’ve barely paid for their front door.