Important Questions to Ask Before Renting Your Home
Are you thinking of buying another home and keeping the current to possibly use as an investment property? Homeowners should weigh a few factors before deciding whether to sell or rent and wait for the market to recover. MSN Real Estate has provided five great questions to ask yourself.
1. How much equity do you have? Homeowners with significant equity should sell, unless their home is desirable rental and they want to take on the challenges of being a landlord, says Diane Rule-Enos, a registered financial consultant with The Patriot Financial Group in Beverly, Mass.
2. What's the lowest rate you can get? "Homeowners with significant equity usually have lower mortgage payments, so they are more likely to have positive cash flow when renting the property," he says. For homeowners who owe more on their mortgage than their home is worth or for those with little equity, the decision to sell depends first on whether they have cash to bring to closing. If not, they can attempt to negotiate a short sale with the lender hold onto the property and hope its value will increase/
3. What's the state of the rental market? Irwin recommends consulting with a real estate agent who specializes in rentals to estimate rental rates and how long it will take to find a qualified renter. Homeowners who choose to rent is based on market rates, not the amount they need to cover their mortgage.
4. What are the costs of owning investment property? Owners who become investors must continue paying principal and interest on their mortgage, property taxes, homeowners insurance, homeowners association fees, maintenance and repair costs. Of course these costs are tax-deductible for landlords. Owning a home as investment property changes owners' tax liability in ways that may help or hurt them. Talk to a tax professional for more guidance.
5. Are you ready to be a landlord? Irwin says the emotional coast of being a landlord includes handling tenants complaints, maintenance problems, and even possibility of eviction. The application process should include a background check by the landlord.
These are five wonderful tips to take into consideration before you decide to rent your home.
1. How much equity do you have? Homeowners with significant equity should sell, unless their home is desirable rental and they want to take on the challenges of being a landlord, says Diane Rule-Enos, a registered financial consultant with The Patriot Financial Group in Beverly, Mass.
2. What's the lowest rate you can get? "Homeowners with significant equity usually have lower mortgage payments, so they are more likely to have positive cash flow when renting the property," he says. For homeowners who owe more on their mortgage than their home is worth or for those with little equity, the decision to sell depends first on whether they have cash to bring to closing. If not, they can attempt to negotiate a short sale with the lender hold onto the property and hope its value will increase/
3. What's the state of the rental market? Irwin recommends consulting with a real estate agent who specializes in rentals to estimate rental rates and how long it will take to find a qualified renter. Homeowners who choose to rent is based on market rates, not the amount they need to cover their mortgage.
4. What are the costs of owning investment property? Owners who become investors must continue paying principal and interest on their mortgage, property taxes, homeowners insurance, homeowners association fees, maintenance and repair costs. Of course these costs are tax-deductible for landlords. Owning a home as investment property changes owners' tax liability in ways that may help or hurt them. Talk to a tax professional for more guidance.
5. Are you ready to be a landlord? Irwin says the emotional coast of being a landlord includes handling tenants complaints, maintenance problems, and even possibility of eviction. The application process should include a background check by the landlord.
These are five wonderful tips to take into consideration before you decide to rent your home.
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