Should You Rent Your Home?
If you, like a majority of Americans, own your own home, the though has probably crossed your mind: if you were to be offered your dream job out of state, should you sell or rent your home? Of course there are many factors to weigh before making such an important decision.
First, you’ll want to think about reasons for keeping ownership of the home. Do you like the home so much that you want to hold on to it in case you ever move back? Are you looking for an extra tax break through property depreciation? Do you want to use the home for a basis for retirement investment? These are all questions you will want to find out so you can answer the question: Should I Rent My Home?
These are all find reason for retaining ownership, but there are other factors to consider that may outweigh the perceived benefits. For instance, are you prepared to be a long-distance landlord, hiring someone to maintain and manage the property for you? There are other costs involved as well, such as advertising costs, turning costs (cleaning and painting between tenants), property taxes and insurance, utilities paid out of your pocket when your property is between tenants and accounting costs. In order to assess these costs, you should research the numbers in your market. Expenses often run 30 to 40 percent of the income before the monthly mortgage costs. More factors to consider when asking: Should I Rent My Home?
The one time you probably would not want to rent out your property is if you’ve recently purchased it. Unless there’s a housing shortage in the market, the costs will outweigh the benefits to rent it out.
If you do decide to rent out your home, here are some quick tips to help you out:
- Interior paint – Keep the colors white or neutral
- Exterior paint – Once again keep it simple with a nice neutral color scheme
- Professional clean or replace carpets
- Make sure home home is insulated and your AC / Heating unit is serviced to keep utility bills down
- Clean the house from top to bottom and considering hiring a professional heavy duty cleaning service (not a maid service)
- Set the proper rent price – Consult a REALTOR for current rent values
- Decide if you will self manage or invest in a professional property manager
- Consult a C.P.A., Attorney and Financial Advisor on the tax and legal implications of owning a rental property or converting a primary residence into a rental property
- In Maricopa County rental homes must be reclassified and specific taxes need to be collected usually based on the city where the property is located.
- In Arizona there are new statutes covering bedbugs for landlords and tenants.
- Consult with the local city or county for the current rent tax rates and how to register your home as a rental property
- Download and read a copy of the Arizona Landlord Tenant Act to know your rights as a landlord and what rights a tenant has.
Should I Rent My Home? or sell it, is a question that people must take the time and careful consideration before making a decision. Keep in mind you should consult your CPA, Financial Adviser and other professionals if you decided to turn your primary residence into a rental home as there can be tax implications when renting your home. You are also required to register your home with Maricopa County as a rental property to collect and pay additional taxes, become very familiar with the Arizona Landlord Tenant Act and either hire a well respected property manager or be prepared to deal with a broken hot water heater at 2am. There are positive factors to consider when renting a home such as holding on to an appreciating asset and a monthly stream of income. If you want to know what your home would bring in today’s rental market or if you decided to sell the home it, call me for a free no obligation consultation at (602) 750-1744.