If you are relocating for a new job or other reason, you may be wondering if it would be a better decision to rent your home rather than list it for sell. Over the past couple of years, our economy saw a huge decline in the housing market, which made it difficult for buyers to afford homes. For those who could afford the purchase of a home, credit approval become an issue. This resulted in a large need for rental homes. Families with children required homes with a larger layout, often in better school districts. If you were fortunate enough to own one of those homes, renting it out could net you a nice amount of money, provided you had another place to live.
The housing market has started to improve. That improvement means that those who were renting are now purchasing the homes they were once renting or they are moving out and purchasing other homes. This as great for our economy and it’s great for anyone looking to move. Here are some pros and cons if you are considering which option to take:
Will you be close enough to manage the property if you rent? You can hire a managing company. They often take about 30% or more but they will run the credit report, assuring that you have credit worthy renters in your home who can afford to make payments. They will also handle any delinquencies, making them the bad guy rather that you! Many management companies will take care of the housing projects such as the yard work, maintenance and all phone calls.
Are you willing to chance the possibility that a renter may destroy your property? Despite the fact that you have done a credit check, and the renter has a score of 900, is citizen of the year, donates time and money at their local church, you can never know what may happen when they move into your home. The fact of the matter is – it’s not their home and they may not always treat it the way you want them to treat it. Some renters may be great and some may not. It’s a roll of the dice.
Are you relocating and is there a chance you want to come back to this home? Is there another reason you want to keep the home? Keeping your home is a good reason to rent it. This means you are having someone in the home to care for it and pay the utilities while you are living elsewhere. It also means you will have money coming in to help offset your other mortgage or rental bills.
Are you concerned that your home will not sell for what you owe? Contact a real estate agent. Make sure you have accurate information. It may be possible to list your home and get what you need to sell it. There may be small changes that can increase the value without costing you a small fortune.
Are you considering getting into the rental business by using this home? If so, it is very important to consider that if this home is your primary residence, and you’ve been in the house for more than 2 years, and you have ANY kind of equity you risk losing your capital gains exemption if you hold on to the house 5 years after you’ve vacated. Therefore, if you want to get into the rental business, using your former residence could be a very bad idea. Sell the home and then buy a rental home.
Contact me if you would like more information about listing or renting. I will be happy to sit down with you and discuss your options.