Are you considering joining one of the fastest-growing populations in post-bubble America: the Accidental Landlord?
Carolina Living Property Management has joined one of the fastest growing professions for Real Estate Brokerages which is Property Management in Charlotte.
The inventory of homes for sale is twice as big as it was three years ago, which could mean a longer wait to sell – and a longer time to shoulder two mortgages or a mortgage and rent payment if you have to move.
The rental market, on the other hand, is robust. Currently Carolina Living Property Management has average days of on the market for it’s rental properties at less than 45 days.
So, what goes into deciding if renting your Charlotte area home is right for you?
When Renting Beats Selling
To make the rent-vs.-sell call, you need to know what your home could fetch today. Let Carolina Living Property Management research and provide a ballpark figure of the price your home will bring.
Can you charge enough in rent to cover your costs or how much can you handle if the amount is less.
You’ll need to use the amount of typical rents provided to you and then compare that with your carrying costs. Those include not just mortgage payments, taxes and upkeep but also a bigger insurance tab: Your homeowners policy may go up if you don’t live in the house, and you’ll need additional liability insurance (for roughly $250 a year, you can get a $1 million umbrella policy).
Add on another 5 percent for unexpected maintenance or a gap between tenants. (Note: Many of our clients purchase a home warranty policy to cover potential major issues. Estimated cost $400 a year) If you want to hire a property manager to handle paperwork and repairs, hire Carolina Living Property Management and cut your projected rent by our low 8 percent fee.
- You have other funds for a down payment
If you have to rely on the equity you’ve built up in your current home to buy your next one, you’re probably not a candidate to rent unless you plan on renting yourself. If this is the case, make sure your total budget will allow you to rent a home you will be happy in.
- You’re sure prices will rise
Becoming a landlord is a bet that you can earn more renting your home and selling later than you would by moving on and putting sale proceeds to work elsewhere.
How much rent you can charge is important, but so is what’s ahead for home prices (see forecasts for 100 top markets at cnnmoney.com/realestate). In fact, even if the rent doesn’t cover your out-of-pocket costs, a big turnaround in your market could make the numbers work
You’re not giving up a great tax break
If you rent for more than three years, you endanger a precious benefit of home ownership – the capital-gains tax exemption. Live in your house for two of the five years before you sell and you’ll pay no taxes on the first $250,000 in profits ($500,000 for a married couple).
But become a landlord for three years or longer and you’ll owe capital-gains taxes on all profits in your home since you bought it. That could wipe out more than a year’s worth of recovery in your market.
Are You Landlord Material?
Be sure to read “what we can ask prospective tenants“. This will give you some insight into what you or your property manager is allowed to ask or advertise for a prospective tenant.
Professional Services at reasonable rates
