BY TAYLOR J KOVAR
CHIEF EXECUTIVE OFFICER
CERTIFIED FINANCIAL PLANNER™
–Hi Taylor – My husband and I inherited a property last year and have finally decided we want to use it as a rental. But now I’m starting to stress about who we rent it to. Is there a demographic we can target, or just a way to feel like it’s all less of a gamble?
–Hey Bella – This is an underrated question, so thank you for asking it! A lot of people get excited about owning a rental property and creating that passive income, but then the reality of becoming a landlord and having tenants takes them by surprise. It’s not as easy as saying, “I’d like a respectful renter with a steady income.” You have to make some decisions on how to rent the property, then you can start wading through the pool of potential renters.
–1. Short-term renting. This is the most hands-on version of being a landlord. If you turn the property into a vacation rental you stand to make more money, but you’ll be a lot busier while you make it. Websites like Airbnb and VRBO make it pretty easy to attract renters, as long as your location is where people are inclined to come for a short visit. On top of the work of welcoming new tenants on a regular basis, you’ll have a lot less say in who you rent to. The vetting process is mostly handled by the renting site, then you can do little more than rate the tenant after they leave. If your main priority is renting to the right people, this probably isn’t the best option for you.
–2. Long-term renting. This is usually what single-property owners look to do, as it has the potential to be pretty hands-off when you get the right tenant. You also have much more control over who you rent to, as a handful of applicants will submit for review and you get to pick who you’re most interested in renting to. You never know when a person will move, or if something will come up that requires eviction, but you might also get that stable tenant who’s very low maintenance.
–3. Commercial renting. Throwing a curveball out here for fun, but have you thought about renting to a little LLC? Lots of variables to consider, but if the house is in the right area and the zoning laws aren’t too strict, you could make it available for a small therapy practice or law firm or any other business type that doesn’t need a huge commercial space. This option would require a little more work upfront but could land you a stable renter if you get an established business owner in there. Might not be an option, but worth considering if it’s possible.
You can’t really predict how running a rental will work out; all you can do is prepare and then handle your landlord responsibilities. These things usually get easier over time, so keep working at it and try to enjoy yourself. Good luck, Bella!
