I know that a lot of you are considering making a move in 2015 and are wondering whether you should sell or rent out your house.
We hear this question every day and our answer is different depending on a variety of factors - temperament of the homeowners, type of home, how much is owed on the mortgage, the condition of the home, what the market is like for renting homes in the area and more.
Here are reasons why you should consider renting out your home rather than selling it.
8 Reasons For Renting Out Your Home
1. Have You Always Thought About Owning An Investment Property But Did Not Know How To Go About It? Well, Now Is The Time To Try It Because You Already Own The Home!
Renting out your home is a great way to experiment as an investor. Since you purchased the home as an owner occupant, you enjoyed a more competitive loan with a lower down payment then you would be able to secure as an investor who goes out looking to buy an investment property.
Investor loans require higher down payments, usually have higher interest rates and have some different clauses and restrictions. So, if you have always wanted to try owning an investment property, now is the time.
Since you already own the home, why not try renting it out for a year or two? You can always sell your home in the future as your personal situation changes.
2. Generate Cash Flow
Because you have competitive loan terms and have lived in the home a few years, hopefully, you have paid down your mortgage balance a bit and can enjoy some monthly cash flow. An extra few hundred dollars a month really comes in handy during these uncertain economic times. I know this from personal experience. We own a few rental properties and the cash flow really helps us pay for the kids - their expenses are never ending and we really appreciate the rental income.
3. Qualify for Tax Deductions While You Rent a Home In Your New Location
Even if you can't generate cash flow, there are still excellent financial reasons to rent out your home. Many of our landlords relocate for new relationships and new jobs and do not buy homes right away as they "try out" these new situations. Our landlords are upwardly mobile and make good money and the tax deductions really matter. Since they are renting in their new locations, having the tax deductions on their prior home really helps.
4. Everyone Needs A Security Blanket
As mentioned above, sometimes these new relationships and new jobs don't work out. Keeping your home as a rental property lets you come back to it in the future, should you need to. Yes, sometimes your emotional attachment can make it difficult to manage your investment property objectively, but we can help you through the process.
5. Renting Out Your Home Is A Good Experience
Learning how to manage an investment property is a great experience. You need to work with your property manager, your accountant, your insurance company, and several other parties to understand the situation. This can lead to many things - perhaps you will buy more properties, perhaps you will open a business of some kind, perhaps you will just learn how to maintain your own home better or, perhaps, you will realize that you are not cut out for being a landlord and get the idea out of your system.
The lessons we have learned as landlords have really helped us in our own home and with managing our own finances. We also have learned how to manage our emotions and keep things in perspective. All good experiences for us, and for you too.
6. Property Values Are Increasing
Although our economy is not fully out of the downturn yet, we are optimistic about the future. Perhaps you bought your house between 2005-2009 and still owe more than market value but are really ready to make a move. What are your options?
>> See What Is My Home Worth?
You could short sell (and your credit score will be negatively affected), you could bring money to the table (yikes!) or you could rent it out. Each of these options has pros and cons and we can help you evaluate the best choice for you.
Values are increasing so by renting out your house, the tenant pays down your mortgage balance while at the same time values increase. Between every tenant and lease term, we can re-evaluate values and determine whether now is the time to sell. Why empty out your 401k or decrease your credit scores when you can just rent it out with our assistance.
7. Being a Landlord Has Tax Benefits
There are some great tax benefits to owning rental property. These deductions and depreciation can really help offset gains and losses elsewhere and you should definitely speak with your tax advisor about these benefits.
8. We Are Here
We know that you have heard horror stories and are terrified that tenants will (a) trash your home, and/or (b) not pay the rent and you will have to evict the tenants, thereby losing months of income while you go through the court system.
That is not going to happen if you hire Chesapeake Property Management to manage your home. We have filed for eviction less than 5 times in 17 years. Yes, you read that correctly. We do not handle a lot of evictions. How do we do this? Great systems, excellent teamwork and very high standards for all parties involved - ourselves, the landlords and the tenants. By working with us, you will have "peace of mind" and can move on to your new home knowing that we are here and that you can enjoy all of the benefits of steps 1-7 mentioned above.
So sit back, relax and let us handle your rental property for you. Give it a try. You have nothing to lose and everything to gain and... whenever you are ready to sell, know that Yaffe Real Estate is here to help. No need to go anywhere else; we handle sales and rentals all under one roof.
As an owner of rental properties for 15 years and as a very conservative financial person, I know you worry... and that is why Yaffe Real Estate and Chesapeake Property Management exist: to set the bar high and provide you with the excellent service that you deserve.