Should You Rent Your Home to Others?October 05, 2015 / Real Estate Trends, Selling
When deciding whether to move out of your home and into a new home, this is a question we hear frequently from clients. Hopefully, this recent post from Realty Times can help you.
1. Renting your current property gives you more cash flow and often more time to look for your dream home and not be pressured or compromise on your next home.
2. You are likely paying homestead mortgage interest rates for your current home, making it easier to make a profit than if you purchased a rental property with a higher mortgage interest rate.
3. One way to build equity is to have someone else pay your mortgage for you. The longer you own your home and the longer it’s rented, the more the amortization tables turn in your favor. The longer you own your home, the larger the percentage that goes toward reducing principal loan repayment.
4. You can deduct depreciation from your income every year you rent out your property though this amount decreases with time. You can also deduct some maintenance and improvement expenses.
5. Real estate serves as a hedge against inflation and against other investments. As long as rents are comparable to home prices in your area, it is a great option.
1. To rent, you must be current on your mortgage, have credit scores to even consider buying another home and saved enough for a downpayment on another home.
2. Rents may not be comparable to home prices in your area.
3. There are additional expenses such as income taxes, listing and management fees (unless you do it yourself which is easier than you think!), and maintenance.
4. You’ll pay taxes on the rents received, less repairs and management fees. Expect to pay more in property taxes on your current property, since the homestead deduction rate won’t apply.
5. Being a landlord can be tough if dealing with tenants that don’t respect your home or skip out on monthly rent.
For the full article, click here and as always contact us for further in-depth insight into deciding whether to rent your current home.