One of the realities of the current market is that it can be difficult to sell your home — especially if you want to sell it for a certain amount of money. One of the things you can do to reduce some of the pain is renting your house when you move, hoping that the market will recover.
The decision to rent out your house rather than sell for what is likely to be a loss can be a tough one. If you are careful, though, you might be able to make it work, even if you do live in a different state.
DIY Property Management
I’ve known for quite some time that I am not cut out to be a landlord. However, some people really like the idea of doing their own property management — even when they live in another state. If you do decide to manage your property from another state, here are some things that you might have to keep in mind:
- Know the contact information for repair people: You are still responsible for repairs on your rental property, so you need to know the info for repair people in your local area. Find out how you can have the repair information and invoice sent to you. If you have trusted friends in the area, you can have them verify the quality of the repairs.
- Carefully select your tenants: It’s important to select good tenants for your rental property, no matter where you live. However, it’s especially important to choose good tenants if you are managing from another state. You want to avoid as many problems as possible. Carefully vet your tenants, and even run a credit check first.
- Be prepared to travel: Be ready to travel if circumstances call for it. You might need to travel to find new tenants, to take care of legal procedures, or just to check up on the property and perform routine maintenance.
It’s also a good idea to understand the tax implications of your rental property. Some of your expenses and losses are tax deductible on your rental property.
Hire a Property Manager
Instead of managing the property yourself, you could hire a manager. There are a number of companies that specialize in rental property management. Even if you didn’t decide to use a company, you could ask a trusted friend or relative to manage your property for you. Some real estate agents will also serve as property managers.
You do need to make sure that you are careful. Your property manager should be someone you trust — and/or someone with good references. Hiring a property manager can be a lot of work, since you want to make sure that you are hiring someone competent and honest.
Once hired, though, a good property manager can be worth what you pay. The property manager takes care of maintenance and repairs, and is responsible for making sure you have tenants. A good property manager leaves very little for you to worry about, allowing you to own the property while you live in another state without having to be on site.
Whatever route you choose, make sure you understand the implications, and you understand what’s involved with managing your property from another state.
Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.