So, you are moving and need to decide if you should rent out your Bay Area Home or sell it. This is a big decision, one that will have a significant impact on your life for years to come. There are lots of factors to consider, you need to get educated before deciding which option is best for you. This article outlines some of important details, once reading you will be better positioned to either rent or sell your Bay Area House.
Expenses Associated with a Rental
Most of us get the concept of renting a house: someone lives in your house, they pay you rent, you use that money to pay your mortgage, you keep whatever is left over. In theory, it’s pretty straight forward, what a lot of people don’t account for are all the other costs that you as the landlord are responsible for.
Property tax: The county the property is located in taxes you annually based on the value of the property.
Income tax: You will have to pay taxes on the rental income you make from the house.
Property insurance: You pay for insurance on the property in case it is damaged or someone gets hurt.
Repairs: You are responsible for updating the house as needed to keep it in livable condition.
Property Management: Not required, but if you are moving far away it’s a great idea, this cost money too.
Once you factor all these costs in, the numbers on renting your house out might not make sense.
Dealing with Tenants
Assuming the numbers still are still attractive after accounting for all the costs listed above, it’s time to consider the tenants. Tenants are people who pay you money to live in your house, emphasis on people. People that can be unpredictable and irrational. Here are some tenant related situations that you need to be aware of:
Do not pay rent: Your mortgage is due even if your tenant does not pay you rent.
Eviction: If your tenant stops paying rent you can evict them but this costs money and you still have to your mortgage while this process is playing out.
Vacancy: Whether a tenant is evicted or leaves under good terms, there will be a period vacancy while you find a new tenant, no rent will be coming in during this time
Damage: Your tenant is inside of your house and if aggravated can cause some serious damage to the property which will ultimately cost you.
The Market Has Been on the Rise
Over the past several years the Bay Area Housing Market has been on the rise, now might be a good time to cash out on that appreciation. As made crystal clear by the housing crash of 2008, property values go up and down. The equity you have in your home can vanish in a matter of months, the only real way to lock it in is to sell your house and get paid.
In conclusion, if your house has great cash flow potential and you are willing to take on the risks of an unpredictable tenant and eventual market down turn, then it might make sense to keep your house as a rental. Otherwise, sell your house and enjoy the headache free cash that is to come.
Give us a call today to learn how we can buy your Bay Area House fast. 925-322-1008