The Top Reasons Not to Make Your Primary Home into a Rental

As a REALTOR, I meet with a lot of people who are faced with the question of whether or not to sell their home in order to buy the next one in the event they can afford to do so. That question has become even harder to answer now that so many homeowners took advantage of the historically low interest rates in the post-pandemic world of the early 2020s.

Of course the answer to this question is going to be personal to you and your situation. Let me suggest several reasons why it may NOT be a good idea to keep your primary home as a rental.

Shopping for a Rental vs. Your Dream Home: The first reason that gets overlooked as much as any is the fact that when you shop for a rental you shop based on drastically different criteria than when you’re looking for your ideal dream home, if you will. You will have different aspects of a property that stand out and matter to you when you’re looking for a home you want to live in compared to when you shop for one to put renters in. That leads me to my next point…

Personal Attachment: You may have emotional ties to your home, making it difficult to deal with potential tenant issues or changes to the property.

Uncertain Rental Market: If the rental market in your area is weak or unstable, you may struggle to find reliable tenants or achieve desired rental income.

Maintenance Costs: As a landlord, you're responsible for maintaining the property, which can incur significant costs over time, especially if the home is older or requires frequent repairs. And renters never care for your property the way you would…ever.

Legal and Financial Risks: Landlords are exposed to various legal and financial risks, including liability for tenant injuries, property damage, and potential lawsuits. If you’re not familiar with your liabilities as a landlord, you’re going to want to bone up on them.

Loss of Flexibility: Converting your primary home into a rental limits your ability to sell or make changes to the property without disrupting tenants or terminating lease agreements.

Mortgage Considerations: Some mortgage lenders have restrictions or may require approval for converting a primary residence into a rental property, potentially complicating the process.

Property Depreciation: Renting out your home could result in wear and tear that depreciates its value faster than if it were owner-occupied.

Tenant Management: Dealing with tenant turnover, late payments, or disputes can be stressful and time-consuming, especially if you don't have experience as a landlord.

Local Regulations: Landlord-tenant laws, zoning regulations, and homeowner association rules may impose restrictions or additional requirements on renting out your property.

Potential Loss of Tax Benefits: Converting your primary home into a rental property may impact your eligibility for certain tax deductions or exemptions associated with homeownership.

If you’re ready to take on these obstacles and it just makes financial sense for you, by all means, rent away. Our next blog focuses on several reasons why turning your primary home into a rental could be right for you.