Renting: The other option?
If You Can’t Sell Your Home, Should You Rent It?
Depending on where you live, the housing market can be on the upswing or settling to new lows. Selling your home should be a decision you weigh cautiously. However, if you have to move for a job relocation, family emergency, or because you can’t afford to maintain the house, should you consider renting it out? It may seem like an easy solution but consider all pros and cons before becoming a landlord.
While you currently can write off your mortgage interest on your taxes, you can also write off repairs, advertising, property management and trips back and forth to a rental property. On the flipside, all monies received as rent are now taxable as income. Always consult your tax advisor to review your personal financial situation.
While it may seem that receiving the rental income would be easy cash flow, you must be prepared for times when you don’t have a tenant. Even in the best markets, turnover and vacancies can be a huge drain on your cash flow if you still have an outstanding mortgage on the property. You will need to have access to cash for repairs and other incidental expenses that may occur.
Unless you are a professional landlord and not emotionally tied to the property, don’t underestimate the emotional toll maintaining your home while someone else lives there can take. It’s hard to see someone else in your space and possibly not caring for it the way you did. You will also have to field calls for complaints, repairs, showings, and general inquiries. An outside property management can be hired to handle a lot of those tasks, but you will always be involved at some level other than cashing the rent checks.
Take the time to run through the scenarios carefully, and if applicable get your spouse’s buy-in, before you make the decision to change the sign from “For Sale” to “For Rent.”
Source: PSB, Our Valued Partner