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We just purchased a new home 5 minutes away from our current home. I'm looking for advice on renting it for 1-2 years, then selling, or just selling it now. Then rental would cover the mortgage & taxes and we would probably have a small profit ($100-200) in addition, after paying mortgage & taxes. Renter would also be paying down $650 of my mortgage principal each month.
Selling seems like the most convienient, stress-free option but I think if we keep the home for a couple years there is a good chance we could sell for more money compared to selling now?
That is a question you have to figure out for yourself.
Future increased value and possible headache (rented) or sell now, stress free.
If you feel the house has no issues I would rent it, get the monthly positive cash flow, then sell it in a couple of years when hopefully, home values increase. Again thats HOPEFULLY.
Oh, and this profit you envision, did you include insurance, maintenance, months with no tenant, and figure out your federal income taxes based on extra income? Bye bye profit.
lets put it this way renting can be a headache you don't want .bad tenants ,even end up like with a drug bust or possibly a grow house for drugs .An injured tenant who wants to sue your homeowners policy .A tenant you have to go to court to get out .=Then an angry tenant that destroys your house on purpose .You never know what will come up .There are more horror stories out there .
Oh, and this profit you envision, did you include insurance, maintenance, months with no tenant, and figure out your federal income taxes based on extra income? Bye bye profit.
Yes, you have to figure up all the costs (including property taxes and utilities not paid by the tenant), but you are allowed deductions for these on your fed taxes as well as depreciation on the property. My rental has actually resulted in a small decrease in my income tax, because of the low rent and the depreciation.
lets put it this way renting can be a headache you don't want .bad tenants ,even end up like with a drug bust or possibly a grow house for drugs .An injured tenant who wants to sue your homeowners policy .A tenant you have to go to court to get out .=Then an angry tenant that destroys your house on purpose .You never know what will come up .There are more horror stories out there .
Well, yes, and if you get out of bed in the morning you might fall down and break your neck. Something awful can happen no matter what choice you make.
You reduce your risk by carefully screening your tenants -- I was in a similar situation to the OP two years ago and the best thing I did was to mention to my neighbors that I was unable to sell the house and was going to rent it. My neighbor's cousin had recently been divorced and was looking for a new place to live. It was the best possible reference: my neighbors certainly would not have recommended him if they had to live next door to a deadbeat wild partier.
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