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Should You Rent Out Your Home Instead of Selling?

Posted on Monday, Dec 16, 2013

The choice to sell or rent out your home requires a lot of consideration. A sudden move or unexpected financial change can leave many homeowners contemplating how to manage their current living situation, all while trying to purchase a new home. Becoming a landlord or becoming a seller has benefits and drawbacks. Take a look at how to determine whether you should rent out your home instead of selling:

Benefits of renting out your home:

You can hold out for the best time to sell. If you’re leaving your home in a down market, you probably want to avoid selling at a loss. Although the housing market is often unpredictable, you are more in control to sell your home when you’re ready and when you can make a profit.

Build your finances. Depending on the market and your property, you may be in a position to charge enough rent to cover your expenses and have money left over. If your location and home is in demand, tenants will be more willing to agree to your rent price.

Cut costs. Usually, you won’t spend as much time or money preparing to rent your home as you would prepping to sell it. This way, the minor fixes, cleaning and alterations you have to do for renting usually aren’t as major as the efforts involved in upgrading or improving for selling.

Enjoy a quicker resolution. While waiting for your house to sell, you won’t have the extra money coming in that you could have from a renter. Having a renter right away means a quicker financial turnaround after your move.

Drawbacks of renting out your home:

Consider your mortgage. If you already have a mortgage you can afford for your current home, it may be challenging to take out a mortgage for your new home as well. Some lenders have strict requirements that make balancing your mortgages challenging. At Gulf Winds, we offer 100% mortgage financing, which means no down payment is needed at closing.

Prepare for work. Searching for a tenant, marketing and showing your home means more work for you. Whether you take this process on independently or outsource it to a property management company, you must be prepared to either spend more time or more money finding the right tenant for your home.

Hidden costs. Although it may not seem like it right away, the rent you collect is considered taxable income. It’s important for you to weight how important this tax on the rent you receive will be and how it will impact your overall income.

Tenant problems. Unfortunately, there are several downsides to having the wrong tenant rent your home. Damage to the house or late or failed payments are a concern for any homeowner. This is why you can’t be too thorough when searching for a renter for your home.  

At Gulf Winds, our financial advisers are happy to answer your questions about personal finance and can steer you in the right direction when it comes to home loans. Many homebuyers qualify for Zero Down mortgage options, so contact us anytime learn about our mortgage programs, and start shopping for your new home today!

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