When you own a home and are relocating to a new duty station, you likely have a couple of choices for your home. While most people will want to simply sell their home, some will want to keep it and rent it out.
Here are some of the considerations that you may want to think about when deciding if renting your home out is right for you:
The potential benefits:
Equity build up
One of the major benefits of continuing to own your home and rent it out is that rental payments will help pay down the balance on your mortgage. This is typically the main reason that military families consider renting out their home when they move. But there are other, less obvious ones.
Is the home in a location where you plan to return?
Often, Hampton Roads serves not only as a place you serve during your active duty years, but also it is on many military families’ short list for places that they would like to retire to. With that in mind, renting your home out with the thought of potentially returning in a few years could be an attractive option.
Rental Prices vs Mortgage Payments
While this is something that you would need to go over with a financial professional for your specific case, as a general rule we have historically low interest rates on mortgages and the potential rental value on many homes in the Hampton Roads area is favorable to create a cash flow positive scenario. Each situation is unique and you need to think through these options carefully.
The Property Management professionals at The Real Estate Group are happy to discuss your situation and provide information about rental values and costs associated with renting.
A couple of things to keep in mind:
When considering becoming a landlord, there are also a number of things that you need to consider. Looking at both side of renting your home out will help prepare you for any unexpected issues that may arise.
Do you have room in your budget for unexpected rental ownership costs?
If you have been living in your home for a couple of years or more, you have a pretty good idea of the condition of the home and potential repairs that may be needed. Once you have relocated to your new duty station, and your home is rented, normal wear and tear of the home will still be an issue.
When you’re the homeowner (and in this case, the landlord as well), you are responsible to keep the home in good repair and do it in a timely manner. You need to set some of the rental income aside for these repairs. And the money that you set aside is above and beyond pest control, utilities, and other fees.
What happens if a major repair pops up?
What if a renter leaves or does not pay and it takes 3 or 4 months to get a paying tenant back in?
In a typical scenario, if you have some savings to cover expenses like this if needed, then renting is more likely to be a more appealing choice.
How is your home financed?
Each situation is different. Most VA loans are only available for the purchase of your family’s primary residence. Also, if you do move from that residence without selling it, you won’t be able to use another VA loan until the first one is paid in full.
Does your neighborhood association have restrictions or quotas on rentals?
Some communities only allow leases of one year or more and have limits on the percentage of homes that can be rented. If you do not get approval before renting your home, penalties can be substantial and/or the lease could potentially be terminated.
Are You Familiar With the Landlord-Tenant Laws?
Each state has different landlord tenant laws designed to balance the rights of the tenant and landlord. What you can do to collect rent, to evict someone, or collect for any damages to your property?
Using a Property Management Service
Oftentimes, military families who have relocated cannot be in the area to manage their properties. But there are other reasons for hiring a management services. Is managing your property the best use of your time? Does it distract you from your mission?
This is a critical question. Given all of the answers above, is managing a property the best thing for you from a financial perspective, a family perspective, and a quality of life perspective? Oftentimes the answer changes and it is time to call a Property Manager.
Call The Real Estate Group today. We are happy to answer questions, discuss your situation and share our expertise. We would love to show you why so many landlords think TREG is the RIGHT CHOICE for property management.