Seniors who are ready to retire often downsize to eliminate unnecessary space and lower their monthly expenses. However, it is possible for them to generate profit from their home and avoid the immediate sale. Renting out the property might provide a wealth of benefits for the seniors.
A Chance for Residual Income
Renting out the property gives the owner a chance to earn residual income and manage additional costs. The extra income could cover medical expenses, pay the rental fees for a smaller apartment, or give the individual funds they need to acquire more assets. Understanding how to operate a rental property helps the individuals maximize their earning potential and get more out of the investment.
Do You Still Have a Mortgage?
If the senior property owners have an existing mortgage, renting out the home could help them cover the cost of the remainder of the mortgage. Downsizing would require them to sell the property, but they would have to pay off the remaining balance of the mortgage with proceeds from the sale. Instead, the homeowners could rent out the property and pay their mortgage off. This enables them to live in a smaller place that is accommodated by their fixed income. Once the mortgage is paid off, the seniors can sell the property and maximize their profits.
Can You Afford Repairs and Maintenance for the Home?
When renting out a residential property, it is important for the investor to have an emergency fund to cover the cost of repairs and maintenance tasks related to the property. It is important for seniors who are considering the investment to take a realistic approach to their current financial status. If it isn’t possible for them to replace an HVAC system or a hot water heater, the venture could prove to be a burden instead of a blessing. Once the lease is signed, the homeowners must provide a structurally sound property with all the utilities working properly.
Do You Want to Rent Out the Entire Home or Just a Room?
Another option to consider if whether they want to rent out the entire home or just a portion. Renting out a room could provide them with residual income and give them a new companion in their home. It is vital for them to conduct proper screening for the individual and determine if they have a history of crimes and if they pay their bills on time.
What Liabilities Will You Face?
Accidents and injuries are always a consideration for rental property owners. Hazards inside or outside the home can lead to a slip and fall injury. The senior homeowners would need to assess the property frequently for hazards that increase the risk of an injury.
Seniors who want to try investing in their own home as a business opportunity might consider renting it out. Downsizing is a common recommendation for seniors who are retiring and don’t have kids at home. Renting out the space could provide a better solution and extra income. Seniors who want to learn about real property investing can start by contacting NRIA now.