Property Management Blog

Should I Rent Out My Property?

Mo Hashem - Monday, March 12, 2018

Homeowners often have trouble deciding whether they should rent out property that they are not living in, and such confusions potentially lead to decisions that do not make financial sense, simply because homeowners fail to understand the right considerations and perspectives to making that decision.

We have been in the business of property management for a very long time, and so we have considerable experience in providing homeowners with the right lenses through which they should make decisions about renting. Here are the most important things you should consider when deciding whether you should rent out your property:

  1. Why do you want to rent it out?
    The alternative to renting out a property is usually selling that property, and hence homeowners must consider why they wish to rent out property. If they are considering withholding the property for the long-term, and if they can reasonably ascertain that the long-term appreciation of their property will provide them with good returns on their investment, then renting out property is probably a good decision.
  2. How will you rent it out?
    There are a variety of different ways one can rent out property. From Airbnb-style rentals to long-term leases, one must consider the pros and cons of different rental strategies, including the return on each strategy. This means that you must consider the effort and the financial return required for each rental strategy, and factor that in your decision.
  3. What is the cash-flow like?
    While this seems like a concept complex, it only requires basic calculation skills and a little foresight. Before deciding whether to rent a property, one must factor in all the costs associated with the rental. This means factoring in any remaining mortgage payments, repair costs, broker commissions, and advertisement costs and comparing that to the cash inflow from the rental to understand whether the rental makes financial sense.

If there is a negative cash-flow, that is, if the costs associated with the rental turn out to be more than the inflow from the rental, then it probably isn't a good idea.

Finally, it is important for you to think like a business owner considering a business venture when deciding on whether to rent your property. It really is about considering whether the decision makes financial sense in the long-run, and factoring in all finance-related conditions such as real estate appreciation, costs associated with renting the property, and the type of rental project you are willing to embark upon.