Should You Lease Out Your Home or Should You Sell?
The thought has probably crossed your mind, whether you found the job of a lifetime in another state, your company is transferring you, or you are ready to downsize and you are just not sure if you should you sell your home or lease it our? Naturally there are many factors to weigh before making such an important decision.
First, you need to think about your reasons for keeping ownership of the home. Do you like the home so much that you want to hold on to it in case you ever move back? Are you looking for an extra tax break through property depreciation? Do you want to use the home as a basis for retirement investment?
These are all fine reasons for retaining ownership, but there are factors to consider that may outweigh the perceived benefits. For instance, are you prepared to be a long-distance landlord, hiring someone to maintain and manage the property for you? There are many other costs involved as well, such as advertising costs, turning costs (cleaning and painting between tenants), property taxes and insurance, utilities paid when your property is between tenants, and accounting costs. In order to assess these costs, you should research the numbers in your market. Expenses often run 30 to 40 percent of income before the monthly mortgage cost. It is important to speak with your CPA to see how your taxes and write-offs will be affected.
The ABCs of Property Rental
If you’ve decided to rent out your home, where do you start? Speak with a Realtor in your area. When I work with clients, I am able to pull the comps in that neighborhood to let them know what other homes are leasing for. It is important to know the condition the other properties were in, what amenities those homes had, etc. Details that you may not find by looking yourself. Coldwell Banker can run the credit checks on applicants and speak with their references to assist you in choosing the right tenant. Your realtor is also a great asset to help you get the house in shape in order to get the highest reasonable rent. This includes interior and exterior patching and painting, carpet cleaning or replacement, appliance tune-up and cleaning, adequate insulation to cut down on utility bills, and fixing whatever needs fixing. They can guide you and help you get the home in shape to get the most rent possible.
Should You Hire a Property Management Company?
It’s not absolutely essential to hire a property manager, but it can make your life a little easier, especially if you are moving out of the area. Your realtor can give you some names of companys in the area that they recomment. Interview at least three different companies, and be sure to ask about accreditation, experience, customer service, references, tenant screening, vacancy rates, maintenance, monthly reporting, eviction handling, insurance, fee structure, property inspection, and any special services they offer.
Do your research and work with the right team, it will make your life easier.