If you live in a destination city for a major sporting event, you may be wondering how the influx of tourists will affect your daily life. You may also be wondering whether there’s any way you can profit from this event while avoiding the crowds yourself. If you’d rather not stick around for the hubbub and are willing to open your home to excited sports fans, you may want to consider putting your house into rental service for the duration of the event. Read on to learn more about how these types of lease arrangements are structured, as well as some factors you may want to consider if pursuing this option.
What types of homes are eligible for a temporary lease?
You don’t need to have a palatial property in order to lease your home for a sporting event — most spectators are just interested in a place to sleep, watch television, and perhaps cook dinner or breakfast. However, the size and location of your home will impact the price you’re able to fetch. Factors like off-street parking (or secure garage parking), a larger number of bedrooms and bathrooms, and close proximity of your home to the sporting event (or transportation to the sporting event) will increase its value as a rental.
If you’d like to rent out your home for the week of the event, your first task should be to check your state and city laws governing temporary rentals. Some jurisdictions may prohibit this, or have specific requirements you’ll need to fulfill (like obtaining a rental permit) before you’re legally permitted to rent out your home. You may also want to carefully look over your mortgage documents to ensure that there aren’t any clauses that could accelerate your mortgage if you use your home as a rental without notifying your lender.
What will you need to do to pursue this option?
Once you’ve determined that it’s legal for you to rent out your home temporarily, your best bet is to contact a commercial leasing company, such as Sunworld Group Inc. Although you can price and market your property yourself without paying any third-party management fees, these leasing companies have significantly more experience and market exposure at their disposal, and are generally able to better screen and select your tenants. When you utilize a third-party leasing company rather than directly renting to your tenants, your only interactions will be with this leasing company — you’ll likely never even meet your tenants.
The leasing company will ask you a number of questions about your home and may require you to supply photographs they can use to market your home to potential renters. When it comes to pricing, you may have a bit of room for negotiation — however, it’s unlikely you’ll be able to talk the leasing company into asking either substantially more or substantially less than the rate they charge for similar properties. The leasing company will keep a portion of this rent to help cover their costs incurred in marketing the property, screening renters, executing the lease agreement, and collecting payment.
You’ll also need to talk to your insurance agent. Because even the most staid renters may inadvertently damage your home or belongings, you’ll want to ensure that your homeowner’s insurance policy covers rental use. If this policy does not cover rental claims, you may be able to purchase a low-cost rider or temporary insurance policy that will help you pay for any needed repairs.
Finally, you’ll want to clean and stage your home. Any sensitive items — like personal or financial papers, valuables, guns, narcotic medications, or other items you don’t want guests or tenants pawing through — should go in a safe. If you don’t have a safe, or if all the objects you’d like to keep in it won’t fit, you may want to purchase a keyed door lock and deadbolt so that you can securely keep these items in a spare room.
When it comes to starting up a property portfolio, many budding investors have trouble getting off the mark. While their ideas and ambition may be great, they have trouble ensuring their first buy is the right one to act as a backbone for further investments. As such, what should you look for when making your first real estate purchase?
Choose an Area with Investment Potential
When choosing a neighborhood to invest in, it’s important that you don’t make a decision based on money alone. Many property investors aim for a specific end of the market and purchase either luxury properties or low-end, cheap apartments. However, landlords who adopt this approach run the risk of miscalculating value for money and don’t take additional factors into consideration that influence rent prices.
The attractiveness of a property does not rely entirely on the attractiveness of the home itself. Rather, you have to consider what local amenities are available and what your target tenant will be looking for in a property. To help you along, consider asking the questions below to get a feel for a neighborhood:
By answering the above questions, you’ll build up a good idea of the neighborhood you’re investing in and where the best properties are located.
Focus on Potential Rental Yield
The success stories of multi-millionaires and their massive investment portfolios can be enough to persuade start-up landlords that they can become rich overnight. Unfortunately, this isn’t the case, and you have to start off low before you can begin to build your property portfolio.
The best way to make profit when it comes to property development is to aim for properties with a high rental yield. This means properties that generate a large amount of rent compared to their purchase price, rather than hoping for a short-term boost in the price of the property. Rental yield is generally discussed in terms of annual percentage – a $300,000 property that rakes in $22,500 per year in rent would have a 7.5% yield.
When you purchase a property on a buy-to-let basis, you will usually take this on an interest-only agreement. This means that you will only pay off the interest that accrues on the house rather than paying off the entire mortgage. As such, the money that you generate from rental yield can be put into other investments, or saved towards a deposit on another property. This is how most investors work their way up the ladder, so by following this principal you’ll be in great company.
Practice Your Negotiation Skills
One of the major advantages of purchasing a property with the intention of letting it out is that you don’t have to wait on your current property selling before you have a deposit ready. This helps you enormously, as you will be seen as a buyer with much less risk than someone who is buying their property after selling their current home.
As such, you should use this to negotiate a discount in price. The majority of sellers will be looking for as quick a sale as possible, so that they themselves can move into another house. Your low risk, immediate sale can help you secure a property discount that may otherwise have been unattainable.
When it comes to real estate, it’s important you have professional support moving forward. As such, you should take time to choose a fully qualified broker with the experience and skills necessary to get your portfolio off to a great start.