How much can I rent my house for?

Determining the right price goes beyond just a simple calculation.

Should You Rent Out Your Home?

Choosing whether to rent out your home is a big decision. There are many factors to consider before making this choice. Are you planning to move temporarily or permanently? Do you intend to live in the home again? What does the rental market look like in your city? Is there high demand? Are you ready to sell the property? Does it make financial sense? Can you afford the maintenance costs of the rental property? Is this an investment property? Are you looking to buy more homes in the future? Accurately answering these questions will help you determine whether renting out your property is a good idea. For example, if you plan to return to your home in a few years, renting it out might be the best option to save the hassle of buying a new home upon your return. You may also want to keep the property if the real estate market in your area is stagnating and you face difficulties in selling the property. However, you will also need to consider the wear and tear that your property will undergo from tenants, which may require repairs before you return to it.

Setting the Price

Many landlords use what is known as the 1% rule, where the rental price is based on 1% of the home’s value. So if your home is worth $200,000, you could rent it for $2,000 a month. However, understanding how much rent you can charge for your home involves more than just a calculation or a single perspective. You can use websites like Zillow, Redfin, and Trulia to gather information about the real estate market, including rentals in your area. Zillow and Redfin offer their own rent estimation tools, which use data to provide a starting point for your property price. You can also utilize search factors to explore the price levels for rental homes in your area. You’ll need to find homes similar to yours in terms of size, condition, location, and amenities offered.

Consider Your Costs

There is more to homeownership than just the mortgage. You’ll need to perform regular maintenance and repairs, and as a property owner, you’ll be responsible for any unexpected emergencies. If you are not local, you may want to consider hiring a property manager to take care of your property. In this case, you will also need to factor in the cost of a property management company, which may include a monthly percentage of the rent and additional fees for finding new tenants. These costs will vary based on your location; investigate this before moving forward with any individual company.

Taxes and Professional Consultation

Rental income is subject to taxes, meaning you’ll have to report your income each year. Furthermore, you will want to ensure that you report any expenses incurred as a result of renting, as these costs can be tax-deductible and help reduce your tax liability. Adding a rental property complicates tax matters, which means you may need to hire someone to assist you in preparation. Don’t forget to take this into account when considering your rental price and the necessity of consulting a professional before renting out your home.

Other Factors to Consider Before Renting

There are more considerations beyond financial ones when deciding whether to rent out your home: Will your mortgage allow it? Do you need to change your homeowners insurance? Do you want to become a landlord? What happens when costs rise? Can you afford this?

Conclusion

Renting out your home can be a profitable venture, especially when the rental market is booming. However, you will always want to weigh the benefits and drawbacks, including the financial and physical aspects of being a homeowner, before taking that step.

Frequently Asked Questions (FAQs)

How can I rent my house?
It goes beyond just moving someone in. As a property owner, you will want to set a good rental price, screen potential tenants, and ensure your paperwork is in order before doing so. Well-known real estate sites can help determine rental rates, while background check companies can give you a good sense of the person looking to settle into your home.

How much should I charge to rent a room in my house?
It may be more challenging to determine how much to ask for a roommate than to rent out an entire house, but the same principles apply. Look for comparable rental rates in your area for an accurate estimate. You should also consider any potential tenants since they will be living with you. Issues regarding shared space and household duties should be resolved beforehand.

Would you like to read more content like this? Subscribe to The Balance’s newsletter for daily insights, analyses, and financial tips delivered directly to your inbox each morning!

Was this page helpful? Let us know why!

Sources:
Zillow. “How Much Should I Charge for Rent?
IRS. “Tips on Rental Real Estate Income, Deductions, and Recordkeeping.”
U.S. Department of Veterans Affairs. “The VA Loan and Guaranty,” Page 12.
California Legislative Information. “AB-1482 Tenant Protection Act of 2019: Tenancy: Rent Caps.”

Source: https://www.thebalancemoney.com/how-much-can-i-rent-my-house-for-5248416