In the year that I've owned my home, I've toyed with the idea of renting out a room or two. I have three bedrooms and I don't use any of them. I live in my basement. I know, I know. That sounds stupid. I have a basement that is the size of all but the largest apartment I've rented and it is where my sweet home theater is as well as my home office (I telecommute). Since it's where I spend so much time, I threw a sofa and a futon and an enormous bean bag down there (and a fridge and microwave). Now, I never even go to the top floor where the bedrooms are.
I could rent out all the bedrooms, including the master bedroom (with its own bathroom). I don't even know what the right price would be and I've heard plenty of horror stories about renting to people, but if I renteded even two of the rooms at only $350/mo, I'd have two thirds of my housing costs covered!
And, if I ever need to move, I could buy a house somewhere else and keep this one to rent it out. Again, I hear being a landlord sucks - but I have a handyman nearby who could do on-site work for me and once the house is paid off, the renters would basically be paying the mortgage on my second home.
Also, I plan to pay down the principal, too. I'm not making any extra payments just yet, but I am putting money in a savings account. If I have an emergency, I have access to that money today. If I don't have an emergency, then once I have enough saved up, I can pay off a hell of a lot of my house at once.
Owning a home can be a hassle. God damn, I sure as hell learned that right out of the gate. (I did a lot of remodeling to fit my lifestyle and my electrical needs, among other things). One thing it gives you, however, is more options. More choices, even if not mobility.
Just seconding - being a landlord can REALLY suck, and is full of hidden obstacles. You need to be committed to it, get proper legal advice and do everything by the book. In principle (though I don't know specific state laws in the US) - tennants have a lot of rights. It's their HOME - even though you own the structure. You may not be able to evict them because you want to move back in. You may be liable for all kinds of things.
And that handyman close by? That's great - until he has a family emergency and isn't available - then it's 100% on you to fix.
I'm not saying the renting-to-pay-other-mortgage is bad idea - it's not, it's a valid strategy - but it's something to be taken really seriously, not something you should try to just pull out of a hat.
Let me say that we just moved into a rental unit and the landlord is pretty dang carpy. He is too cheap to pay a qualified person to fix anything. Stuff is falling apart all over. He resents us for asking for simple repairs that cost less than a tenth of what we paid to move in. He calls the neighbors to try and get them to do it for free, and if they won't do it, he comes over on the weekend to try and fix it himself (usually failing, always doing a "ghetto fabulous" job).
We are on the verge of asserting my state's statutory process to compel the landlord to fix things because he is too cheap to use a qualified repair person, even on complex or potentially dangerous tasks like the gas stove, and even when there will be a long lag time on repairs if he doesn't.
My advice is that if you're going to be a landlord, get familiar with some of the maintenance companies in your area and don't be too cheap to call them out. I have been following this discussion with some interest, but I really believe any position, renter, owner, or landlord, can make sense in the correct set of circumstances. You just have to think things through and do it the right way, and it will save everyone involved a lot of headache.
You should really convert the basement to a seperate residence, so you can independently live there, while also providing the same conveniences to the renter upstairs.
Rent to a family.
Being a landlord does suck. I have worked closely with a real estate investor managing 30 residential rental properties.
I would say the two biggest issues are the quality of tenants and the quality of homes.
Central A/Cs die. Whole homes need to be repiped. Roof leaks.
Tenants do not pay or will have 5 people in a 2 bedroom home. Eviction is costly and time-consuming.
The only real estate I would consider as an investment right now is something commercial/industrial, like a group of warehouses or office suites, something with multiple renters.
One pretty much has to assume that your property is going to need a repainting/recarpeting/other repairs when the tenants move out and price accordingly. Most renters (not all mind you) will do all sorts of bad things to your property. Taking that into account is important when renting out.
Unless I moved out of my home, I'd actually be more likely to just rent out rooms. I think there's far less risk and legal complication if you're essentially renting out a room to a "roommate" versus giving over your entire home to another person or family.
I could rent out all the bedrooms, including the master bedroom (with its own bathroom). I don't even know what the right price would be and I've heard plenty of horror stories about renting to people, but if I renteded even two of the rooms at only $350/mo, I'd have two thirds of my housing costs covered!
And, if I ever need to move, I could buy a house somewhere else and keep this one to rent it out. Again, I hear being a landlord sucks - but I have a handyman nearby who could do on-site work for me and once the house is paid off, the renters would basically be paying the mortgage on my second home.
Also, I plan to pay down the principal, too. I'm not making any extra payments just yet, but I am putting money in a savings account. If I have an emergency, I have access to that money today. If I don't have an emergency, then once I have enough saved up, I can pay off a hell of a lot of my house at once.
Owning a home can be a hassle. God damn, I sure as hell learned that right out of the gate. (I did a lot of remodeling to fit my lifestyle and my electrical needs, among other things). One thing it gives you, however, is more options. More choices, even if not mobility.