Pricing and Costs of House Rentals

Become a landlord: Determine the pricing and costs of house rentals

During times when the housing market has an uncertain future, many folks start looking to rent a house instead of buying a home. You can use this to your advantage: Buy when prices are low, and rent out the property for a profit. Before you run out and start looking for homes to buy, take a moment to really consider what this might cost you.

As a landlord, you'll be responsible for handling any and all tenant problems and situations, which, in itself, can be quite an undertaking. But you need to understand that you'll also be responsible for paying for the house rental in its entirety. This includes the following:

1. The property itself. This is the first thing you should consider, since all landlords engaged in renting houses must first purchase the home.

2. Any maintenance needed. Rental homes require maintenance of the house, the lawn and any structures on the property.

3. Legal and accounting fees. If you rent out a house, you'll need your tenants to sign contracts and you'll have to keep track of your income and expenses.

Estimate the cost of potential house rentals

Usually, the price of a home is directly proportionate to its square footage. Other factors at play are the location and condition of the property. Doing a bit of research into costs in your locality is wise; this will give you some background information for each area of town so you can negotiate a good deal. Also, you'll need to figure in the costs for property taxes (check your local property appraiser's website for estimates) as well as homeowners insurance, which also varies widely between municipalities.

Figure out the costs of maintaining your rental house

It's not enough to just buy a property, put some tenants in it and forget about it. If something breaks, you're responsible for it. Expect to pay between $20 and $70 per hour for handyperson services. Small jobs will obviously cost less than more extensive projects. You may choose to take care of grounds maintenance as well, so you'll need to find a lawn service to keep your yard looking nice. This varies depending on property size, with rates starting around $25 per mow for smaller properties.

Price out professional services for your potential house renting business

Before you put up a house for rent, you'll need to write up a lease contract for your tenants to sign. An attorney can do this for you for between $50 and $200. If you will need the services of a lawyer on a continual basis, you might consider putting an attorney on retainer, which will cost you at least a couple thousand dollars. Fees for accountants vary depending on how much work they have to do, and this is usually charged per hour. Assistants generally cost $40 to $100 per hour, while veteran CPAs can charge up to $400 per hour.

• Another item to consider is the cost of advertising. House rental listings are usually placed in local papers or online; you can also stick a sign out in the yard if you're looking for a renter. Ads in the newspaper are relatively inexpensive at around $10 per week, give or take a few dollars depending on your area. Online ads are usually free or cost very little. Water-resistant yard signs customized with your information can cost as much as $30 per piece, less if you buy in bulk.

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