So you have been promoted into a new job that requires relocation. So what are you going to do to your current house? Sell the house and move on? Or rent it out? Well, you can always sell it but by doing so, you will also have to part with all the memories you have built with it. Also, if your new job will not work out as you think it will, you will not be able to go back to the house that you are already comfortable with. So in these cases, it might make more sense to rent out the home for a few years rather than to sell it. This also sounds a good financial sense for you, long termly speaking. Aside from that, here are four reasons given by The Locals why it is more advantageous to let someone rent out your house then selling it for good:
- It’s a Great Investment
Your house is a very great investment. Renting out your home can be a great way to generate passive income. If you are still paying your mortgage, you can look for a tenant to stay there and charge them a monthly rent that is greater than your mortgage. By doing this, you don’t have to worry about your monthly payment for your house, you will also make a little bit of money from it.
Aside from this, there is also an advantage when it comes to tax. As with any business, your revenue should exceed all the cost, fortunately, all your costs can be taken from your tax. For instance, the payment of commissions to a property management company and the expenses incurred by the repairs may be deducted from its tax. Additionally, you can deduct every trip to see the property from the tax.
See? If you don’t need additional funds to buy a new house, it is always wise to have a rental property to have a passive income.
- It Saves the Cost of Selling
Selling can make you a lot of money but it is also accompanied with a lot of expenses. For instance, you have to pay for around 5 to 7 percent commission to the agent and after you have closed the sale, another 1 to 3 percent shall be given. Also, you have to pay for transfer taxes which differs from city to city. It can be between to 1 to 5 percent. In short, selling a house can easily diminish the equity even if you have profit in the sale.
You might even think about some pre-selling expenses like maintenance. For instance, painting, window washing, and others. After the sales, there are still some expenditures you should think about. Besides the commission that is stated above, capital gains tax, moving costs, and home warranty of buyers are just some.
- It Helps Pay For Housing In Your New City
If your old house is already paid fully, you can use the income from renting it out to buy your new house in your area of reassignment. What you can do is to rent out your current home preferably equal or higher than the mortgage you will have on your new home. Just make sure your pricing is reasonable and is still below the average mortgage of houses in your area. If there are no comparable rental properties around, you can try to demand the price that you want.
If your property is far from the location you will transfer, it is advisable to hire a property manager. Although they require a fee, they can really help you by screening your tenants, get estimates for repair and maintenance, and take annoying late night emergency calls from your tenant.
- It Gives you the Chance To Change Your Mind
Even if you get a good job in another city, it will not provide the assurance that you will surely like the place for good. It’s also hard to make sure that your new position will work out for you and there is always a chance that circumstances will change and that you have to go back to your old place. So hold out your plans to sell your old house and rent it first during your adjustment period so if you change your mind, you can always go back. It will help you avoid the steps of selling your unit, and looking for and buying another one.