According to the Pew Research Center, one-third of all households are currently renting out all or a portion of their home or second property. This is the highest percentage of homeowner renters in the last 50 years.

Sure, the income is great BUT renting out all or part of one’s home comes with a unique set of challenges, according to real estate entrepreneur and founder of Hard Money Bankers, Chris Haddon.

Haddon told InmanNews’s Veronika Bondarentko, “Learn every aspect of what goes into a successful investment property you buy…price, rehab costs, nearby comps and value, ongoing maintenance costs, taxes and insurance, financing options, tax benefits…the whole nine yards.”

Translated that means learning and knowing about the pros and cons of short/long-term rentals, local housing laws and legislation and knowing who’s fixing ongoing necessary repairs and how much those repairs cost.

Here are some of Haddon’s tips concerning residential property rentals:

  1. Do your research.
    1. Haddon urges potential renters to become an expert on both the house and the neighborhood PRIOR to renting it.
    2. Know the local tenant laws and market conditions.
    3. Know the history of the house, who lived in it, what and when past repairs were made and how those repairs may impact the house now.
    4. Jake Harris, a real estate investment expert, urges all potential renters to regularly MONITOR rent prices and market conditions because prices and conditions change constantly.
  2. Research all state and local legislation and housing laws that could impact your ability to rent out your residential property.
    1. Some cities/neighborhoods do not allow short-term rentals.
    2. Some cities/neighborhoods require that hosts are present for the duration of a short-term stay.
    3. Haddon goes so far as to say, “Don’t buy a property far away (from where you live.) Not for the first 5+ rentals you buy.” Wonder what Roofstock might say about that advice?
  3. Put yourself in your tenant’s shoes.
    1. Tenants want the same thing you want when renting – a clean, fully functioning, safe property at a “normal” price point.
  4. Treat your rental like a business.
    1. Do the research, invest the time and money and be prepared to do what is needed when it’s needed.
    2. Have a substantial business plan to help guide you through the inevitable rough spots…repairs, disagreements, late/non-payment problems, etc.
  5. Be present.
    1. Respond to tenant requests as soon as possible. Communication is the name of the game.
    2. Know what’s going on with the property and any associated problems.
    3. Know who is coming and going from the property.
    4. Know the difference between “knowing” and micromanaging.

Both Haddon and Harris recommend that property owners who rent all or a portion of their residential property self-manage those properties for at least one or two rental cycles in order that the owners become familiar with the rental process. After that firsthand experience is under the owner’s belt, the owner can then decide whether or not to hire a property manager going forward.