Chances are, your current home won’t suit your needs indefinitely. If you’re living in a small starter home or a condominium, you may want to upgrade to a larger house as your family grows. If you’re already in a large residence, you may want to downsize your home when your children move out. Also, there’s always a chance you or a family member may need to relocate for work, in which case it’s time to say goodbye to your current address.
The big question is what to do with the property when you move. Are you better off keeping your old place as a rental, or does selling it make more sense? While renting allows you to either pay off your mortgage or make a little money every month, it also comes with a fair amount of risk and added tax complications.
Why Rent Your Home?
When a tenant pays you rent, you can use the check to cover your monthly mortgage. In a sense, your tenant is paying for you to earn equity in your home. Once the mortgage is paid off, you can keep any monthly rent as income.
Costs of Renting
When calculating the cost of renting a house, consider these potential expenses:
Mortgage Payment. Consider both interest payments and principle payments.
Property Taxes. These vary by area, but expect to pay up to 2% of your home’s value per year.
Landlord Insurance. This covers tenant damages and protects you if someone is injured on your rental property. According to HouseLogic, landlord’s insurance is typically 15% to 20% more than homeowners insurance.
HOA Fees. These payments are required if your house or condo belongs to an association.
Repairs and Replacements. Windows, doors, walls, carpeting, roofs, and major appliances must be repaired or replaced.
Maintenance. After a tenant leaves, common costs include exterior paint, interior paint, and carpet cleaning. You’ll almost always need to clean the carpet between tenants, and you may need to touch up interior paint as well. Exterior painting is more infrequent – expect to paint every five years or so.
Rental History Checks on Tenants. Most of the time Tenants pay for their background check.
If you need any further information about the how to manage the property and keep the management cost low please give us a call at 877.987.7653
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