Moving to another house and keeping the first one and just renting it out is a tried and true method of becoming a real estate investor. You first have to make sure you’ll generate enough rental income and whether your lender will approve you to carry both properties.
Let’s say it all worked out and you did it. You’re now living in a brand new house and your old one is up for rent. Now what? You want to find that tenant right away and start those rent checks rolling in. There are some things you should do before all that. First, check with your REALTOR about all the local rules and regulations about renting your house. Some places require landlords to have a business license, others don’t (not in San Antonio). Some places require you to have the home inspected first, others don’t (not in San Antonio). That inspection, it’s a really good idea. Because for the most part those inspections are all about safety. You might learn a few things. Like in some places the interior park of a deadbolt has to open with a latch instead of a key. So if there is an emergency the tennant won’t have to search for the key just to get out. So that inspection can be really important.
Next, you’ll have to advertise the place and make sure the potential tenants can find it. Your REALTOR can help you with that too. They can get the photos done, work through a description of the property, and get it all online.
Your REALTOR can also help you evaluate tenants, check their references, and pull their credit. Which will help you know if they’re a good candidate or not. That may be the most important step – finding a good tennant. Someone who pays the rent reliably every month. Someone who’ll keep the place clean and take care of it. You find a good tennant and you’re pretty much on your way.
Finally, your REALTOR can help you draw up the lease and make sure all the required paperwork is in place. They can also collect the rent, the security deposit, the other fees and basically take care of all of that. Some landlords prefer to do all that themselves and that’s fine if you have the time and you know the local laws about renting out property.
Now at this point you’re going to have to make a decision. From this point on do I want to do it all myself or do I want to hire a property management firm. Many landlords do all the work themselves and if you have the time that’s fine. In that case, if an appliance breaks down, you arrange to have another one brought in. If the shower won’t drain, you call in a plumber. That sort of thing. It’s really not that hard, but if you don’t have the time and don’t understand the laws, you might consider asking your REALTOR about managing the property. They’ll take care of everything (for a fee) and you just sit back and collect the rent checks.
Either way, once the tennant is in place and the rent checks are rolling in, congratulations, you’re a landlord. Just think about what that now means. You own two houses. One is your primary residence and one is your old house that you’re now renting out. That could mean a lot to you and your family moving forward. If the rent is sufficient to pay the mortgage, you’re really building wealth with that investment. Every month the mortgage is paid down bit by bit using someone else’s money. Over time as rents increase, that will happen faster. Plus, don’t forget that if property values rise so does your wealth. The equity in that first house and the one you live in will add up to become a substantial part of your financial picture.
So with that one big move, renting out the place you live in when you move to another home, that makes you a bonafide real estate investor. Which only leaves one more question, the next time you move, should you do it again?