It’s a great time to sell a home, a lot of “accidental landlords,” those who couldn’t afford to sell when prices plummeted, are jumping into the seller’s market now. But that doesn’t mean that selling is the best option. Renting out your home may make good sense, even if you’ve never really dreamed of becoming a landlord.
Why rent it out?
Well, you already own the home, so if you’ve been interested in buying investment property, you’re already halfway there. The bank already financed your investment. Plus, real estate investors typically see a nice return on investment over time and can help you increase tax deductions as well http://www.entrepreneur.com/article/228506.
Make it an asset
By renting it out, your house becomes an asset, something that can earn you money, and potentially more money than selling it, especially if you can rent the house out for more than your monthly mortgage payment on it. If you’ve been trying to sell and the house won’t move, chances are it’s a liability for you and you could turn that liability into a way to make money, or at least cover your expenses.
Renting out the home also gives you a safety net and means you hold on to it in case you ever want to move back in. If you’re leaving your family here for a job there, you might have plans to return to the area, and keeping property gives you more flexibility in a potential return.
Things to consider when you rent your house
Of course, being a landlord comes with its own set of issues.
You may need to make improvements on your home to get it up to code before it’s ready to rent out. When you rent out your house it should be clean and not need any major repairs. When it comes to home improvements before renting, there are a lot of issues to consider like the cost of an improvement versus how much more rent you can then charge or the quality of tenant you can attract.
Managing the property
You’ll need to decide if you’ll use a property manager or if you’ll be taking the 3 a.m. calls when the furnace goes out. A property manager will need to be paid, typically 10% of monthly rent plus 50% of the first month’s rent when new tenants move in, but will handle issues like advertising vacancies, collecting rent, scheduling repairs, dealing with legal issues and more.
What you can rent your house out for isn’t based on how much money you need to make on it, rather, how much tenants are willing to pay. Deciding how much to charge for rent can be a confusing issue, and depending on where your trying to rent out a house, it may not make financial sense. If you’re not sure it makes financial sense to rent out your home, do some investigating. Forbes has a handy calculator to help you compare potential selling price and income you’d get in rent, a real estate agent in your area is also a great resource for specific information about your situation.