If you need another source of income to support your family or just want extra cash for your savings, try renting out one of your properties or even a room in your home. Starting a rental property provides you with a steady income stream from your tenants.
What’s even better is that this is passive income, which means it takes little to no effort to maintain. You only need to handle the occasional maintenance duties and pay the bills and mortgage (if ever). You can get an even lighter load if you hire a property manager who handles all the property-related duties for a fee. Renting also helps you hold onto (and earn from) your property while waiting for the right market conditions to sell it.
Setting up a rental property has a variety of benefits for your income. However, it also comes with a variety of challenges. Here are helpful tips to help you establish your rental business:
Start Small
Even if you already have a large budget, it’s best to start small to test the waters. Try remodeling one of your apartments and renting it out first, or rent out one of the rooms in your home. You could also get a loft conversion to add a room specifically for rental use. Once you’re comfortable earning from your small-scale property, move up to buying and renting out new units. With responsible management and savings, you’ll be renting out multiple buildings in no time.
Decide Between Long-Term and Short-Term Renting
Your income will depend on your niche. There are two ways to rent out your property: long-term and short-term.
- Long-term Rentals – These have contracts that span years. You get paid monthly or annually. This is great if you want to get a consistent flow of income.
- Short-Term Rentals – These have weekly or even daily contracts, like ones you find in Airbnb. Because people only rent for a short time, you can charge significantly more than long-term rentals.
Invest in Proper Decoration and Furnishing
If you want to attract and retain tenants, you need to make your rental property beautiful, or just update its design if it’s old. Here are some guidelines to consider.
- Paint – Use a neutral colour scheme using high-performance paint to prevent maintenance headaches.
- Flooring – You can’t go wrong with sealed concrete or high-quality laminate. They have a timeless look. They’re also a breeze to maintain!
- Basic Furniture – If you have extra money for furniture, go for it. Essentials include a sofa for the living space, a bed, and tables and chairs for the dining area.
Understand Your Responsibilities
Unless you hire someone else to manage your property, you’ll be the designated landlord. This comes with a variety of responsibilities like:
- Keeping your property well-maintained against health hazards
- Protecting your tenant’s deposit in a scheme that’s approved by the government
- Evaluating your tenant’s right to rent
- Providing the official how to rent checklist to tenants
If you only rent a room within your home, however, you’ll become a resident landlord. This comes with vastly different responsibilities compared to a regular landlord.
Renting out your property gives you a steady and passive source of income that can significantly boost your wealth. However, it requires a variety of responsibilities and considerations. Start small, find your niche, understand your landlord responsibilities and provide decent furnishing and decorations to get a constant stream of tenants, and ultimately, money.
