Why You Should Consider Renting Your Home, Not Selling

for-rent-familyWho doesn’t want to move into a bigger and better home? However, that doesn’t mean you have to sell your current home. In fact, it is quite possible for you to get the home of your dreams while generating passive income through your existing home. How is that possible, you may ask? Well, there are two words to define it: rent it! You simply have to put your home up for rent instead of selling it. You can even get a San Jose Property Management service to manage your rental property, relieving you of all the hassle associated with being a landlord.

Just like selling/buying a home, renting out a home is a major decision, and you need to consider many factors before you can be sure you are making the right decision. Let’s look at the factors you should consider:

Factors to Consider Include:

  • Financial objectives
  • Real estate market conditions for both the resale market and rental market
  • Real estate appreciation rate
  • Vacancy rates for rental properties
  • Property condition
  • Future house needs
  • Knowledge of landlord/tenant laws
  • Federal & State Taxes
  • Cash reserves for a rental property

Current Finances

It is important that you first determine your financial situation and whether or not you can pay for a second home without selling the first. You can consider talking to a financial professional such as a mortgage broker to discuss specific details such as your credit, income, savings and equity in the home you currently own. If you don’t need all the equity in your home for the down payment on a new property, you may be able to take out a home equity loan or refinance it to cover the down payment for the new home.

Cash Flow Target

What percentage of return are you expecting on your property? Some people are happy even if they generate a 5% return on their property. This is a decision you have to consider seriously as it will determine the level of cash flow you have to generate. If your current living expenses along with mortgage payments are covered, you can settle for a low cash flow. Of course, you have to consider the location of the property and the general rent levels in the area. You cannot overcharge!

Associated Costs

It can cost a substantial sum of money to bring a house into a livable state. If you want to sell, you will have to spend the money before you can find a buyer. Instead, you can rent it out and delay the renovations until you have the spare cash.

Can You Be A Landlord?

As a landlord, you have to be patient and tolerant. If you lack these traits, you won’t be able to deal with renters. In that case, it is best that you sell your home off or get a San Jose Property Management professional to manage it for you.  You must have knowledge of Federal and State Fair Housing Laws, tenant screening, credit report law, lease contracts, state disclosures, rent collection, evictions, repair/maintenance, property & liability insurance, etc.

Taxes

You also have to account for the tax you have to pay on the property. This is a task to discuss with your tax advisor.

As you can see, renting your home may be a viable alternative to selling your property.  Obtaining the services of a San Jose Property Management firm will alleviate the day-to-day management demands of a rental property owner!