Home by Jon Ross
The real estate market situation can significantly change in a relatively short period of time and many homeowners who are unable to sell their properties at a price deemed acceptable for them choose to rent their residential properties while waiting for the market to move up. Renting your home is considered a viable option. You cut the costs and at the same time are able to sell the property or move back in in the future. On the other hand, renting your property raises several important issues that you should definitely consider before making such an important decision.
Are You Able to Sell Your Home?
First of all, it’s crucial to realize that your house is an investment and every decision concerning your house should be based on proven investment principles. If you’re moving to a new place, selling your old home will eliminate many possible problems and inconveniences you’d have to deal with as a landlord. You don’t have to worry whether your rental property will stay empty or whether your tenant will leave the place in dreadful condition. Furthermore, you won’t get additional bills for repairs from a property management company and you won’t need to cover a shortfall for a mortgage and strata fee payment. Selling your home means freeing up equity for purchasing a new house and starting with a clean slate. Taking care of one house is much easier than maintaining two or more residential properties. Owning more houses requires deep financial reserves and leaves you with a smaller amount of free equity. In addition, you may have a tax-free capital gain from your transaction.
On the other hand, if you sell your property, you definitely lose the potential appreciation of your property. If you’re not aware of the real estate market situation you might suffer a significant loss on your property if selling at a bad time. Moreover, if you want to return to the same area sometime in the future, you could be priced out of the market. It’s important to watch the market when selling your home and consider all possibilities since you can save a lot of money if you sell it at the right time.
Could You Be a Landlord?
Calgary House by Mdaines
There’s no need to give up when the market is unfavourable and you’re unable to sell your residential property — there’s still the possibility of renting your home. Renting your property creates cash flow and rental income should cover the property’s mortgage payment and any incidentals. If your monthly expenses are low enough, you might even make some profit. Furthermore, renting your property is considered to be a real estate investment and as an investor, you have the possibility to use several tax breaks. A huge number of new opportunities in the real estate market will suddenly be open for you when your residential property starts to make money. It allows you to save a decent capital that can be used to invest in another properties, thereby deferring taxes on that profit.
Everyone who considers renting his house should be aware of the responsibility that comes with owning more than one residential property. Becoming a landlord is a more demanding task than it seems. Not only do renters often treat the home in a very different way an owner would, but they also often have a lot of complaints that occupy the landlord for some time. Of course, you can hire a property manager; however, that means additional expenses that can together with mortgage and maintenance payments grow into a considerable amount. Furthermore, a landlord has to pay her mortgage even when the property is vacant. Having sufficient funds is the key issue of renting residential property since committing to more than one house requires deeper pockets than maintaining a single home, In addition if you rent out your home you loose tax-free capital gains of selling your home. However, it’s crucial to know the local legislature that sets out the rights and responsibilities of landlords and tenants.