When you're getting ready to move, don't think that selling your current home is the only good option. Keeping your home and renting it out, especially if you enlist the help of a property management company to handle all the landlord-tenant details, can be a wise financial decision. This is the case whether you are buying a new home or not. Here are five benefits to keep in mind regarding renting out your home instead of selling it:
Your Home Will Be There in the Future
If you really like your old home and are attached to it, it may be comforting to know it's still yours and you can go back to it in the future if necessary. Maybe instead of buying a new home, you actually plan to take a year off to travel or work abroad, and would like a home to return to afterward.
Or maybe your home is bigger than what you currently need and you plan to downsize but would like the option of moving back if you have children in the future. You may even want to have two homes so that a grown child or aging parent can live in one of them for a period of time. Whatever the reason, holding onto your old home and renting it out affords you a lot of flexibility.
You Will Enjoy Rental Income
At a minimum, you should be able to rent your home for a price that covers all your major expenses, including the mortgage and property taxes. If you bought your home a while ago when things were more affordable and live in an area of the country where housing costs are on the rise, you can easily make a profit by charging current market value rent. In fact, renting out your old home is a great way to get started if you hope to use real estate as a way to make passive income.
Your Home May Continue Appreciating in Value
Depending on your area, your home may be appreciating in value at a steady rate. If you sell now, you won't be able to cash in on this increasing value later. Plus, the longer you (or a renter) pays a mortgage on the home, the less you owe and the more equity you accrue. Your home may be a great financial asset that you'd regret letting go of.
Avoid the Hassle of Selling
Hiring a property manager and renting out your house is a lot simpler and less time-consuming than selling your home. This is an especially important consideration if you are in the process of buying a new home, since being involved in two major real estate transactions at the same time can be a huge headache.
Possible Tax Incentives
While you do need to claim rent as income on your taxes, this is usually offset and then some by the many tax breaks you get as a landlord. Fees to your property management company, cleaning costs, and other expenses incurred by renting out your home can normally be deducted from your taxes. Be sure to discuss your specific situation with a tax accountant or lawyer before your begin renting out the home, to ensure that you get all the deductions you are entitled to and know what to keep track of.
If you decide to reap these benefits by renting out your home, be sure to hire a property management company like Condominium Management to assist you. They will do everything from screening applicants to find the most responsible tenants to answering those pesky 6 am calls when your renter's furnace goes out in the dead of winter.