Unforeseen medical expenses can be quite costly. Even if you have a preexisting condition, most people aren’t prepared for the financial burden that a true medical emergency presents. Entering a home care facility is one such expense. If you or your loved one are struggling to cover residential care or nursing home fees, you may have options.
Even if you’ve never been a landlord, you can rent out your property to pay for your care fees. The money you collect from your tenants can not only help offset the cost of your medical bills, but it also means keeping your beloved home in your possession, even in your absence.
Keep reading to learn more about how this process works, the benefits, things to consider, and if renting out your property to pay for your care fees is the best option for you.
How Does Renting Out Your Property to Pay for Care Fees Work?
No two situations are exactly the same, but many of the basic factors are. And it looks something like this.
You or your loved one are forced to enter a residential home care facility or a nursing home for an undetermined period of time. You can’t cover all of the expenses and need some supplemental income. You’re also unsure what to do with your existing home.
You don’t want to sell it because you love it and plan on returning to it at a later date. But you also can’t afford to continue paying the mortgage and maintaining the property while also covering your mounting care costs. So, what are your options?
One solution is to rent out your property while you’re gone. This could be for six months, a year, or longer, depending on the lease and your health. There’s also no guarantee that the rent will be enough to cover the entire cost of your care fees, but it can supplement a big chunk and help get you closer to affording the care you need and deserve.
Once you decide to seek home care, you and your loved ones can discuss the possibility of renting out your property. Websites like CompareCaring.com can help you find the best facility for your needs and budget so you can start planning your future. In addition you can see ratings of different care providers quickly.
In the meantime, let’s talk more about how the rental process works, what to expect, and the potential benefits and drawbacks.
Things to Consider Before Renting Out Your Property to Cover Your Care Fees
While this may seem like a simple solution for covering the cost of your care, there are a few things to consider before diving into the world of property management and becoming a landlord.
Who Will Manage the Property?
This is one of the biggest questions to answer before renting out your property. When you enter a home care facility, all of your attention and energy needs to be on yourself, your health, and getting better. The last thing you want or need to worry about is maintaining your home, collecting rent, and managing your tenants.
Your loved ones could handle this for you, but that’s another burden you may not want to put on them. The best solution to this problem is to hire a property management company or letting agents experienced in the rental process. For a small fee, these professionals can not only find and vet tenants but also collect the rent, maintain the property, and handle any unforeseen issues or repairs. This gives you peace of mind and the freedom to focus on your recovery.
How Much Can You Charge in Rent?
Setting reasonable and competitive rental fees is another thing to consider. You can’t simply charge the same amount as the monthly fees you’re paying to the home care facility. While these amounts may be similar in some cases, one may be much higher than the other. With the average nursing home charging £960 per week in the UK, these can rise quickly.
An experienced letting agent can help you compare your property to other similar ones in the area. Seeing what other competitors are charging and how the market is behaving can help you set a fair rental price that attracts quality tenants but also brings in the monthly amount you need and deserve.
How Much is the Cost of Care?
If you’re thinking about renting out your property to cover care fees, the only practical question to ask is, “How much will my care cost?”. Once you know how much you have to pay, you can start budgeting your expenses and income.
The money you make from your rental property may not be enough to cover the entire cost of your care. You may need to supplement with other sources of income like savings accounts, medical insurance, or other financial aid. Consider other expenses as well, like letting agent fees and taxes. Rental income is taxable, which means a portion of your earnings will be paid to the local government.
How Will You Find Reliable Tenants?
This is every landlord’s biggest nightmare – finding tenants that pay on time, don’t damage the property, and uphold their end of the rental agreement. The last thing you need when entering a home care facility is to worry about the condition of your home or whether or not the tenants are paying the rent on time.
That’s why you must perform extensive background checks on all potential tenants. This includes calling previous landlords they’ve rented from, checking their financials, and drafting a detailed contract that protects you and your property.
If you’ve never rented before, you’ll likely need help with this step. You can also consider renting your property to someone you know, like a family friend or family member.
How Long Will the Lease Be?
Rental agreements and leases come in all durations and lengths. Some leases run month to month while others extend for 6 months to a year. Deciding on the duration of the lease in this case can be tricky, especially since there’s no way to guarantee how long the property will be vacant.
Your best bet is to establish a month-to-month lease. This allows you the flexibility to return home when you’re ready. Keep in mind, though, that not all tenants are interested in a short-term agreement. Many renters want the security and reassurance that they have somewhere to live for an extended period of time. These are all factors to consider when drafting the lease agreement and deciding if renting out your property is the best option for covering your care fees.
The Benefits of Renting Out Your Property
Once you get all of the particulars out of the way, you can start enjoying the benefits of renting out your home or property in your absence. Here are some of the top reasons to consider this money-making opportunity.
You Can Keep Your Home
This is one major benefit of renting your property to cover your care fees. Not only will you have a house to come back to when the time comes, but you won’t have to sell your beloved home. There’s no way to predict the state of the property market when it comes time to sell, either.
That means that you may be forced to sell your home for much less than it’s worth, taking a serious financial hit you can’t afford. Instead of rushing into the sales process, renting out your property lets you keep your house until you’re 100% ready to sell and the market is at its best.
You Can Cover Some of Your Medical Expenses
The main reason people rent out their properties to pay for care costs is for the extra income. Most people can’t afford to cover the monthly fees and expenses of a residential home or nursing home for longer than a few months. At this point, you may be forced to dip into your savings account, cash out bonds, take out a loan, or sell other property. Renting out your property in your absence may help combat these financial stressors.
Budgeting your expenses versus your income is the first step in this process. Find a care facility that meets your needs and budget. Consider its location, the staff’s credentials, the level of care they provide, and other services and amenities. Next, find out how much they charge per month, how often you’re required to pay, and if there are other added expenses. Call your insurance company to determine if your current plan covers any of your medical expenses or conditions.
Once you calculate how much money you need to enter a quality care facility, you can determine your current income and whether or not renting out your property is a viable way to cover these expenses.
Your Home Will Be Maintained in Your Absence
Leaving any property vacant for an extended period of time can result in unwanted expenses, repairs, and maintenance. Frozen pipes in the winter months, overgrown landscaping, and faulty appliances can all go unnoticed and add up to a big bill when you return home.
By renting out your property in your absence, you can be sure that someone is looking after it. Whether it’s responsible tenants, you handpicked yourself or a property manager you hire to oversee the rental process, knowing your home is being occupied, used and tended to gives you peace of mind and the freedom to focus on your health. You can also rest assured that all aspects of your home will be in good, working order upon your return.
That is if the tenants live up to the rental agreement. In the event they don’t, a security deposit can help cover any unforeseen expenses.
Consider Renting Your Property to Pay for Your Care Fees
Truth be told, you didn’t plan on becoming a landlord. But you’ve found yourself in financial need as your health declines and your care fees rise. The good news is that with enough planning and assistance, you can safely and successfully rent out your property to pay for your care fees.
If this sounds like a tempting offer, Rentround can help you find local letting agents with experience in everything from finding and vetting tenants to rental agreements, marketing, and more.