Your house no longer suits you. Now what?
There’s no one answer – and many, many things to consider – when you’re deciding what to do with your current Southern Maryland home. Should you sell it or rent it out?
Before you do anything, I urge you to talk with your accountant or financial planner. He or she can help you determine whether renting out the house is a sound financial move. Will it bring in positive cash flow? (If it doesn’t, and you’ll be looking at a loss each month, consider selling the home.)
While you’re waiting for your accountant to get back to you, here are some other things you may want to consider.
Condition of the home
It’s not as easy as you think to sell a home as-is. If there are big problems, a buyer’s lender might require that they be fixed before it will proceed with the loan. Even smaller problems can cause a significant reduction in the selling price and a longer sale process. Tenents are more likely to overlook a home’s flaws than a prospective buyer.
If you don’t have the money to make repairs, renting out the house may be the best option – as long as your financial counselor agrees and your other considerations point to renting, too.
Can you tolerate being a landlord?
Now, if you’re emotionally attached to your house and it is in pristine conditions, you may not want to rent it out. Tenants are notorious for not caring for homes as well as a homeowner. Problems can fester without the owner being notified, causing additional damage.
But let’s face it: Just living in a home can cause damage, from scuffed baseboards to burnt countertops and dead landscaping. If your heart breaks at the thought of any damage, maybe you should reconsider becoming a landlord.
If the emotional stuff doesn’t get to you, remember that there will be routine home maintenance that you will be on the hook to do even though you don’t live in the house. Guess who pays for the plumbing bill when the tenant’s child tries to flush his toys down the toilet?
If the roof leaks, the refrigerator dies, or the HVAC unit needs repair, the onus is on you to set things right. If you lack the energy, desire, or funds to make repairs or replacements, landlording is not for you.
Your tolerance for risk
Becoming a landlord is a risky endeavor. What will you do if the rent is late or if it isn’t paid at all? Will you have the money to make the house payment?
If you have to evict someone, will you have the time and money to spend on protracted and stressful eviction proceedings? If not, you either shouldn’t become a landlord, or you should find the extra money to pay a professional property manager.
State and federal income taxes
Remember: I’m not a CPA, so, again, I urge you to contact yours. Taxes are complicated and become even more so when you own an investment property. I do know that there are many tax deductions for investment property owners, from being able to write off the interest associated with the mortgage to depreciation.
“The cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred,” writes Stephen Fishman, J.D., at nolo.com.
Your tax professional can let you know what, if anything, has changed in the tax laws.
Selling the home instead
If you decide to sell your Southern Maryland home, you’ll be taking advantage of one of the best sellers’ markets in history. You’ll no doubt be pleasantly surprised when you learn how much your home is worth right now!
Since you don’t need the money to purchase the new home, why not consider investing it for your future? Or, maybe take that family vacation you’ve been dreaming about?
Brandywine MD Homes for Sale and Real Estate Services in Southern Maryland. You now have a search engine to help you with your Southern Maryland home search! And I’m ready to provide you with a custom home valuation if you’re considering selling your home. Let’s connect to discuss how I can help you. Contact Kimberly Bean at 301-440-1309
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