The decision to rent or sell doesn’t have to be hard with all the facts. Your ROI could be higher, but are you ready to be a landlord? The benefits of renting vs selling may be so great, it might be a hard opportunity to pass by.

The real estate market is exceptionally strong right now. As a result, many homeowners are debating whether it is best to rent out their old home or to sell that home.

Renting Your Home Is a great investment
Owning and subletting an income property is a wonderful means of adding diversity to your current streams of income. This is even more true if you have a low balance on your mortgage or if your property is paid off.

But, Are you Ready to be a Landlord?
Choosing to rent your home requires you to become a landlord. Not everyone is able or willing to take on this task. If you are interested, here are benefits associated with renting instead of selling.

renting vs selling question

Renting vs. Selling

The benefits of selling your home is a simple thing. It will result in an immediate windfall of cash. It’s a cut and dry decision. You’ll have a large payday and be able to move on with your life.

So what’s so great about renting?…

Higher Return on Investment

Renting will allow a steady stream of cash, over time, and for as long as you continue to own the home.

Depending on how long you stay in the rental business, your return on investment could be much higher, overall, than selling the home for immediate cash.

Higher return always involves more risk. There are many factors that could impact your ROI that are completely beyond your control.

Examples of these include tax implications of being a landlord real estate owner, various types of interest rates, the overall condition of the property you are renting, and the status of the real estate market. You must carefully consider all of these factors when making the decision to rent or sell your property.

woman with calculator

Landlord Rent Calculator & Rent Estimate by Address

How much can you make? This is the first step in making the decision. The monies received could pay off a current mortgage, help you pay off your new home, pay off previous debts, fund a college account, or fund any number of other purchases. You could even invest the money into a potentially lucrative endeavor or place it into a retirement account.

First you have to determine a rent estimate. You must charge fair rental prices, or your home might sit empty.

A landlord rent calculator and a rent estimate by address will take into account the market value of the structure that you want to rent. Then, you will estimate a percentage of market value to come up with your fair rent amount.

In most instances, that value will fall between 0.8% and 1.2%.

Let’s say that your home is worth $125,000 on the market. It’s recommended you charge anywhere from $1,000 to $1,500  to rent the home.  Also, estimate the rent by the address. If the area is a nice area where you can get a higher rent, charge on the higher side,  $1,500 each month. In a lower scale area, try for the lower number,  $1,000.

tax paperwork

Tax Implications

If you elect to rent out the home that you own instead of selling it, you must understand that you will have federal-based tax responsibilities. All of the income from the property must be placed on your federal tax return; however, all of the expenses associated with that rental property may be legally deducted from the rental income.

Examples of deductible expenses include – but, are not at all limited to – the interest charged on the mortgage of the home, the property taxes, repairs, and standard depreciation.

Additionally, advertising expenses, maintenance fees, the cost of utilities, and the insurance that you have on the property may also be deducted from the rental income that you bring in from your property.

You will need to place income and expenses on Form 1040, Schedule E, Part 1. Form 4562 is used to determine depreciation. Keep all records to ensure that you are in compliance of your tax responsibilities with the federal government.

Benefits of Renting

There are many benefits of renting vs selling your home. First and foremost – as a landlord -you will be your own boss. You can, typically, set your own hours and come up with the prices that you want to charge in terms of rent.

You can choose whether you rent by the week, every two weeks, or by the month.

The passive income is the biggest advantage when it comes to renting property. Yes, you must maintain the property and you must keep up on repairs, but, generally speaking, the money will roll in each month with very little effort.

If you want to reduce the amount of work that you have to put into the property, you may hire a property manager to handle all of the administrative tasks, the maintenance, and the repairs.

Benefits of Hiring a Property Manager

A property manager is a professional that has a high level of competency when it comes to taking care of rental property. They have the ability to add a high level of value to your rental property investment. Not only will they assist with the basic business tasks, the maintenance that has to be performed on the property, and the repairs that need to be done, but they help in other ways, too.

Property managers help in the tenant screening process, which allows you to get higher quality tenants in your home. They handle legal issues that may impact you as a landlord. You will also have less cycles of tenant vacancy.

If you are ready to commit to renting instead of selling, we can help!

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