| To rent or to sell? That is the question many | | | | property manager or handle the property |
| homeowners face when contemplating the option | | | | yourself? If you plan to live more than an hour |
| of owning an income property. Before you decide | | | | away, you might want to consider turning over |
| to officially become a landlord, here are a few | | | | some of the hassle to someone else. For |
| things to consider while you make your decision. | | | | example, if you live in San Diego but your rental is |
| The very first factor to evaluate is whether or | | | | in Laguna Beach, it will be a serious pain to drive all |
| not you can afford to own two properties. You | | | | that way to show the property to prospective |
| may be able to refinance your old home or | | | | renters. But be careful! Some property managers |
| borrow against its equity in order to come up | | | | charge ten percent or more of the property's |
| with a down payment on your new one. But, | | | | monthly rent. |
| once you officially own both properties, you will | | | | If you choose to sell, current tax laws offer you |
| incur expenses that you might not expect. | | | | a window of opportunity to avoid paying taxes on |
| For example, there will be times when there are | | | | the gains from your former home. If you lived |
| no tenants in your rental property. No matter | | | | there for any two of the previous five years, |
| how consistent your tenants might be there will | | | | you can sell a home, even if it is currently used |
| come a day when you just can't find a renter to | | | | as a rental property and any gain on the sale of |
| save your life. | | | | the house is excluded from taxation. The limit is |
| Also, you will have repairs; which are not always | | | | up to $500,000 for married taxpayers filing a joint |
| as easy to plan for as you might assume. What | | | | return and $250,000 for single people. You will, |
| happens when one of your tenants decides to | | | | however, still be responsible for the home's annual |
| leave the bathtub running for a few hours on | | | | property taxes. |
| accident? Or worse yet, what if they turn off the | | | | Being a landlord may be a serious pain, but it also |
| heater in the middle of winter, go out of town for | | | | brings in extra revenue each month. It's up to you |
| the weekend and let the pipes freeze and burst? | | | | to decide whether or not you'd like to venture |
| Sure, you'll plan for the occasional coat of paint or | | | | into rental property waters. Even if you try it and |
| garbage disposal repair, but oftentimes repair bills | | | | decide it's not for you, you can always sell the |
| come in much higher than you budget. | | | | property and walk away without having to pay a |
| You'll also want to think about other factors that | | | | heaping amount of gains taxes. If you are serious |
| are out of your control. What will you do if you | | | | about the endeavor, talk with an experienced real |
| end up with a deadbeat tenant? Some areas take | | | | estate agent about your options. |
| months to evict a deadbeat tenant. Will you hire a | | | | |