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Is buying the house next door to me to rent a good idea?
My next-door neighbors are moving, and their home is for sale. I was thinking about buying it and renting out the property as a secondary source of income. I figure that having my rental property next door would make everything easier and more convenient. Are there any downsides to buying the house next door to rent?
Patrick Price · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Buying the house next door to you and renting it out is not necessarily a good idea or a bad idea—it all depends on what the renting market is like in your area.
Becoming a landlord can be a really great way to generate income. But it is a time-consuming project. If you don’t do enough research ahead of time, you could end up losing a lot of money and on the hook for two mortgages. It could be that the house next door is a great house for renting and it would go really well—but choosing it just because it happens to be next door is not the best reason to choose it. There’s a lot more market strategy that goes into picking out good houses for renting out.
There would indeed be certain benefits to having your rental unit close by. You would be able to get to know your tenants and keep an eye out for problematic behaviors—not that you would necessarily be able to do anything about it. The laws that protect tenant privacy would still apply. Being around noisy or rowdy tenants all the time but not being able to do much about it could get really frustrating—it might even be tempting to go over there unannounced, which could get you in a bit of legal trouble.
The idea of keeping a watchful eye on your property might seem appealing until you realize that as a landlord there’s not much you can do to stop problematic behaviors. The only real weapon you have is eviction. And if you do evict your tenants, that income dries up immediately. It’s easier to fix damages once a year than go all year without tenants. Often, as a landlord, ignorance is bliss.
In summation, buying the house next door might be a good idea. But there are quite a few drawbacks as well. In the end, what makes it a good rental house or not has more to do with location, accessibility, property values in the area, local demographics, and more—you’ll have to do a lot of in-depth research to know if it’s really a good idea or not.
If you decide to move forward with the purchase, you’ll want to make sure you have the right type of
home insurance
for your newly purchased property. If you’re shopping for home insurance,
Jerry
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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