With my husband finishing up his Ph.D. and beginning the job search, there is a very real chance that we will move in the next year or so. The thought of moving comes with a number of concerns — not the least of which is what we are going to do with the house we live in. We know that many people choose to rent out their homes for now, rather than try to sell them in such a tough market. And it appears that I may soon be faced with the same choice.
Reasons I Might Consider Renting Out My Home
The biggest advantage to renting out a home is that it provides a way to wait out the housing market downturn while getting help making monthly mortgage payments. The home can be kept up while we wait for home prices to recover, and the income made from rent payments can be offset by some tax breaks. Then, when things are improved, it is possible to sell the home at a better price — maybe even to our tenants.
While some might point out that it could be a source of passive income, I really don’t think that the rent we could get for our home would really do much beyond cover the mortgage, taxes and home insurance payments.
Why Renting Out My Home Worries Me
In truth, while it would be nice to rent out the house and then sell it when the housing market recovers, the idea of attempting such a thing worries me more than just selling the house and being done with it.
One of the reasons I don’t want to rent the house out is that I’m not sure whether the appreciation on the home would be worth all the trouble associated with renting out the house; I’m pretty sure I’m no landlord. Here are some of the things that worry me about renting out the house instead of selling it:
- Finding good tenants would be a hassle. However, if you don’t find good tenants, and just take all comers, you could easily end up with a home that is damaged.
- Maintaining the property would be difficult, especially if we moved more than 100 miles away. We’d have to arrange for the upkeep of the property, and perform other maintenance from a distance. If we had to hire a manager, it would be another expense. Plus, I dread trying to collect rent from someone who lives hundreds of miles away.
- Qualifying for another mortgage would be difficult with one already hanging around our necks. And, even if we did get another home loan, would I want to worry about making two mortgage payments if I couldn’t find a tenant, or if the current tenant paid late or skipped payments?
- Selling could mean more taxes, since I might be taxed on the entire profit of the home. Without having the house as a primary residence, the property might no longer qualify for the capital gains tax exemption.
In the end, just considering these possibilities makes me cringe. I think I would rather sell the home for $10,000 to $20,000 less than we bought it for if it meant selling quickly so we wouldn’t have to be burdened with the house. Taking that kind of hit is still better than having paid more than $33,000 in rent for four years (unless you are thinking that investing the difference between rent and home ownerships costs would have been better).
What do you think? Would you rather sell the house, or rent it out?
This post was included in the Carnival of Money Stories