Unless you're wealthy enough to maintain multiple residences for yourself, when you move to a new home, you typically either sell the old one, or or rent it out. Although you may have never thought about becoming a landlord, it can be a sound financial move, especially if you meet certain criteria. You may want to consider the advantages of renting your house as an investment, rather than selling it.
Depending on the costs to run the property and the amount of rent you'd be able to charge, it's possible to make a monthly profit. To determine whether this is possible, add up your charges -- mortgage payments, homeowner's insurance, property taxes, maintenance fees and property management fees, if applicable. Then compare these against the going rate for rent in your area. You'll have to fix maintenance issues as soon as they crop up. These could be minor issues, such as hiring a plumber or replacing a furnace or the roof. Older homes may require more repairs than newer homes. However, before you start getting dollar signs in your eyes, remember that your home may not be rented all the time; in these cases, you'll have to cover the costs on your own.
Even if you aren't making a profit by renting the property out, the rent that you receive goes toward building equity in your home. This is particularly important if you weren't living in your home very long, as most of your mortgage payments were going toward interest. Selling at this point may mean that you'd incur an overall loss, even when you sell the home for the same amount you paid for it.
A down real-estate market can mean that your home has lost some of its value. If you rent it instead of selling it right away, the market may turn up again, allowing you to wait for a better selling opportunity. For example, if you know of a new building project or company that can help boost property values, your home may be worth more in a few years.
When you rent your home out, you become a business owner, which offers you distinct tax advantages. Most notably, you'll be able to deduct the costs that you incur running your business, which includes property tax, renovations, maintenance and paying for a property management company.
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