Renting Your Home In A Down Market
Renting Your Home In A Down Market
Many seller’s are opting to rent their home in a down market if their house has not sold especially if the owners are being transferred to another area, or they owe more than it’s worth and are upside down on the value. Certainly renting has many benefits and downsides.
Here are the benefits:
- A renter is usually quicker to acquire in a down market than a buyer, especially when you have a lot of competition in your area.
- Hopefully the house payment will be covered by the rental amount.
- You still are allowed to deduct the interest payments as your mortgage where as now paid by the renter, plus tax wise the property is now available for tax depreciation.
- Renting does not have to be forever – you may find a solid renter who stays 3 years or longer giving time for the house to regain value while paying down the mortgage and in turn sell the home for profit at a later date.
- Insurance costs remain the same with a tenant or a listed vacant house for sale.
Here are the downsides:
- Be sure to have a maintenance company to procure a quality tenant, one who checks credit history and has previous experience – again those fees are tax deductable.
- Since most leases are only one year, if a tenant moves out after a year or two lease you might still not be in a position to sell and will have to cover the house payment during the vacancy in addition to where you now live.
- If the house you rent is not a newer home be prepared for the cost or various repairs to the home and maintenance.
- Now that your home has been a rental you will be responsible for capital gains on any profit once you sell the home when previously as the homeowner there were none.
- Cost between renters – there may be cost in preparing the home for showing between one renter and the next such as paint, carpet, cleaning and minor repairs.