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Month: July 2015

Should You Sell Your Home or Rent It?

Thinking about selling your home?  You may want to consider holding on to it if you can afford to do so.  Here’s why.  In this market, rental properties are scarce and rental rates are at a premium.  Since the foreclosure crisis, there are still many that prefer to rent or may have no other option due to their credit score.  And where do most people want to rent?  In single family homes.  So if you have enough reserves (usually 6 months) to cover your mortgage in case of no renters, you could buy a new home while keeping your current home as an investment property.

 

Things to consider:

  1. Check with a lender to see if you qualify for this option.
  2. Find out what the rental rates are in your neighborhood for similar properties.  If it is more than your current mortgage payment you could stand to make money each month as well as enjoy tax benefits.
  3. Consider whether you will manage the property or if you will hire a property management company to do it for you.  They typically charge 10% of your rental rate.  If it is only one property, you can likely manage it yourself.
  4. Research how you will find renters.  I posted on Craigslist and had a call within an hour!  They turned out to be great renters.
  5. Subscribe to an online tenant screening service so that you can verify the creditworthiness and legal history of your prospective tenants.
  6. Talk to an accountant about how to document properly for tax deductions related to owning an investment property.   Also inquire about selling the investment property down the road and avoiding capital gains tax.  If you have lived in your home 2 out of the last 5 years you could be exempt from paying taxes on your net proceeds.  So make some profit while renting, then sell the home at a profit and not pay taxes on your net proceeds.  Have your accountant help you document this properly.

 

Renting your own property can be a great experience and financially rewarding!

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