Advantages of renting:
1. The property will provide income over time and for your retirement.
2. Right now, we’re in a buyer’s market meaning there are more homes for sale than there are buyers to buy, so you may be forced to sell at a loss.
3. Less people are able to qualify for a home loan because borrowing requirements have tightened meaning, even if someone wants to buy your home, they may not be able to.
4. The number of people renting homes is increasing.
Disadvantages:
1. dealing with tenants
2. legal issues
I recommend holding your property to anyone who can handle it. If you keep it as a rental, it should cashflow every month, bring in more with rent than what it costs you for mortgage, taxes and insurance. Nevertheless, it will still cost you to keep it. Vacancies, damage and upkeep will come into the picture.
If you decide to keep your home and rent it out, will you manage it yourself or will you have a management company take over the day to day issues? Your rental should be handled by you as a business, even if you have only one property. If well managed, it will prosper. If poorly managed, it will fail.
If you plan to hire a real estate or property management company to manage your rental home, consider:
1. Most management companies won’t attach the same importance to selecting good tenants and maintaining the property that you do. If you don’t live nearby or don’t want to manage for yourself, you need a good company with a good reputation to manage it for you.
2. Management fees will take part of your profits. In many cases, management and leasing fees can make the difference between positive cash flow (money left over after all expenses) and negative cash flow. Be sure you know your true numbers going into the decision. The management company you hire should be able to go over your numbers with you to give you a realistic idea of your costs and potential income.
If you can’t sell your home for what you need to pay off your debt, consider renting it out until you can make a profit on it in the future. We started out years ago with 1 rental property and have been adding to that number for years. We not only manage our own properties, but are branching out into managing properties for other people because so many people have asked us for help.
It is very possible to become wealthy owning rental properties. There are plenty of horror stories from people who have done it wrong or let one bad experience take them out of the game. If you’re thinking about renting, don’t just listen to your uncle’s brother’s cousin who had a tenant poke holes into the wall. Talk to those of us who love the business and have committed to it for the long term.
Do you have questions about renting your home? If so, contact me here. Renting your property may be a way to not only keep from losing money on your home, but a way to save for your retirement in the long run!
