Should I rent my house if I can’t sell it?Ã‚Â There has been a lot written about how buying a home is less expensive than renting one in most parts of the country. Rents are skyrocketing and homes are still at great prices. These two situations are also causing some sellers to consider renting their home instead of selling it. After all, a homeowner can get great rental income now and perhaps wait until house values increase even further before selling.
This logic makes sense in some cases. There is a strong belief that residential real estate is a great investment right now. However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for.
Before renting your home, you should answer the following questions to make sure this is the right course of action for you and your family.
10 QUESTIONS TO ASK BEFORE RENTING YOUR HOME
- How will this impact my taxes? If the house was your primary residence and the value has gone up, you may be able to exclude up to $500,000 of the taxable gain on sale. If you convert it into a rental, this important tax break may be reduced or eliminated over time.
- Is your property up to code? Pools gated, carbon monoxide detectors installed? Inspected by a professional home inspector?
- How will you respond if your tenant says they canÃ¢â‚¬â„¢t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
- Have you interviewed experienced eviction attorneys in case a challenge does arise?
- Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
- Will you allow pets? Cats? Dogs? How big a dog?
- How will you actually collect the rent? By mail? In person? How will you handle late payments?
- Repairs are part of being a landlord. Who will take tenant calls when necessary repairs come up?
- Do you have a list of craftspeople readily available to handle these repairs?
- How often will you do a physical inspection of the property?
Again, renting out residential real estate is historically a great investment. However, it is not without its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.
Seven Gables Real Estate