Selling your home doesn’t always have to be the only option. Renting your home is a route many people have taken. The option may be more beneficial to you depending on the circumstances you are in. Consider all aspects that go into renting a property before deciding if it is right for you. Is the property worth holding on to? Where is your move taking you? Are you cut out to be a landlord? Will it be good or bad for you financially? Becoming a new landlord can be a lot more work than some people anticipate. There are many pros and cons to think about when debating on renting your own.
Some advantages are things such as the renter being able to pay your mortgage payments while you still continue to build equity. You can possibly make a profit if your monthly expense is low enough. If you know you will only be gone for a certain amount of time, such as 2 years for grad school, you will have a place to come back to. You also don’t have to have the stress of keeping your home on the housing market. Some disadvantages are the fact that mortgage payments still have to be made when the property is vacant. When the property is being lived in, you have the risk of choosing a tenant that doesn’t take care of the property. On top of the money you will have to pay anytime something breaks, you would have to come up with additional money to cover any damages when a bad tenant moves out. While figuring out how to budget your money, you will also need to figure out how to budget your time. You will have to address any issues they present to you. If there is a leak somewhere or the dishwasher breaks, the tenant will call and you will be expected to make it right. This can seem impossible if you are no longer local. Taxes are a major factor to think about also. You can have advantage of writing off things like utilities, advertising, repairs, and even travel expenses on your rental, however, you can sometimes be at a disadvantage too. If you are not the resident in the home for 2 of the 5 years prior to selling then you wouldn’t be eligible for the capital gains home-sale tax write off.
Contacting a property management company and a tax professional would help get you the knowledge and preparation you need before making such a big decision. If you are planning on renting your home while living out of town, you can hire the property management company to handle all screening, rent payments, maintenance, etc in exchange for a percentage of the property’s rental amount. Knowing exactly what you’re getting into and what you are able to handle will allow you to be a successful landlord.