Electing a full sale or a property management situation is a life-changing decision that shouldn’t be taken lightly. In choosing whether or not becoming a landlord is right for you, there are a number of factors to consider, but primarily they fall into the following three categories: financial analysis, risk, and goals.

The financial analysis is probably the easiest of the three to perform. You will need to assess if you can afford to rent your house. If you consider the likely rental rate, vacancy rate, maintenance, advertising, and management costs, you can arrive at a budget. It is important to both be detailed in your projections and to have enough reserves to cover cash-flow needs if you’re wrong. The vacancy rate will be determined by the price at which you market the property. Price too high and you’re liable to be left vacant. Should you have applicants, they’ll often be a group that for some reason couldn’t compete for more competitively priced homes. Price too low and you don’t achieve the revenue you should. If you want to try for the higher end of an expected range, understand that the cost may be a vacant month. Any way you slice it, it’s difficult to make up for a vacant month.

(more…)