Top 5 reasons NOT to rent your home 

Hey, guys. Mike Taylor, broker owner of Red Door Property Management. Today we're going to do something a little bit different. We're always extolling the benefits of owning a rental home. Of all the great things that we can do for you as a property manager here at Red Door Property Management, today we're going to take a look at the top five reasons not to rent your home. There are certain situations, certain people where you probably want to think twice or maybe you don't want to rent your home. 

Reason number one

If you have some sort of emotional attachment to your home, maybe this was your personal home, it was your mom's home, your brother's home.  Anything where you have some sort of personal attachment where you're going to not be able to make sound decisions. From a business perspective, you might want to think about not renting that home. We have some clients who have lived there their entire life. This was their childhood home and they tried to turn it into a rental. Most of the time it ends up not working out. You have to be able to detach yourself from this. This is now a business. This is now an asset that you're dealing with. This is not your mom's home, your childhood home, anything like that. These are business decisions that need to be made. And if you have an emotional attachment and you cannot make those business decisions, then you might want to think about not renting that house or sell it and buy a different one, but probably not that one. 

Reason number two

If you do not have enough reserves in the bank, so you should have at least three to six months of reserves in the event that something happens to your rental or if it takes a super. Long time to fill a vacancy. Or if you have an eviction or if you have some sort of insurance issue a flood, a roof, something. There's lots of things that happen. I'm trying to scare you. These things don't happen every single day. But you do need to be prepared for that. So, if you cannot weather the storm of, call it three to six months and you are literally waiting for the rent payment to make your mortgage payment every single month. And if it's late and or doesn't come, then you are going to be worried. Then you should definitely not rent your house.

Reason number three

If you have an old home with a lot of deferred maintenance, you probably should not rent your house. You are most likely going to get crushed on maintenance costs when you have a tenant move in there, because maybe when you were living there, you could deal with the nuances of having an older home with some deferred maintenance. But when a tenant is in there and they're paying what they feel like is top dollar for a house, they're going to want everything to work and when I mean everything. I mean everything. They're not going to want to have to turn a handle with a wrench or have a light that doesn't work, anything. They want everything to work. And so, if you have a lot of deferred maintenance projects, then you probably should not turn that house into a rental. 

Reason number four

If you do not have a long enough time horizon, if you only have, say, a year or maybe two, it may work out, it may be the right situation, depending on what's going on. Sometimes we have some clients who just want to move away for a year, have a job assignment overseas for a year, and their intention is to move back into this house. In that situation, it does work. But if you are an investor and you are doing this as an investment, but you only have a one to two-to-three-year time horizon, it may not be the best investment for you. You really need to have a longer-term time horizon, 35, 10, 15 years. I mean, that's our most successful investors have a way longer time horizon. That way they can, if need be, they can take a price cut one year, maybe their cash flow goes to nothing or even, maybe even negative for that one year, knowing that, hey, we've had to fill that vacancy and then we're going to get it back when rents increase next year. So, if you don't have a long-time horizon, that might kind of be very impactful in a negative way on your returns. 

Reason number four

Is if you do have to have kind of the landlord mindset renting a home. Although we like to think we make it look pretty easy, can be difficult. Now, we are here to take the brunt of that and do the day-to-day tasks for you. But you as the owner are going to need to make some decisions when things come up, things do arise, we are here for your support and to execute on those things. But you definitely have to have a landlord mindset. And so that's something you need to think about going into this, do I have that landlord mindset? Can I make these rational decisions? And is this the right move for me? So, we like real estate. I own real estate. We think it's a great investment. But there are certain times where you need to ask yourself, am I the right person? Am I in the right situation? And is this the right house to turn into a rental home? 

So that's it, guys. That's our top five reasons not to rent your house.