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Worth it to rent my home?


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Only lived there for three years - so I believe if I sell now I'd end up losing money.When I bought the home I did it with no money down via Navy Federal Credit Union and my interest rate is at 5.125% yet with no PMI. Should I refiance to lower the interest rate?

The property management stated I would need to paint all the walls which is about $1000, deep clean, and professionally clean the carpets - but then again all of this is stuff I would probably have to do if I sold it.

Anyways - even with renting it at the ideal rate. I'm only making $160.00 monthly maybe - and that's after the property management company takes their cut. (Doesn't help property taxes went up this past year so my mortgage went up $50.00 monthly - hopefully the house is worth more now)

Little to no profit - barely breaking even - and that's if a tenant is occupying the place...

Is it worth it to rent...my goal is just rent it for two years minimum and that why I wont be losing money when I sell and can take some of that apply towards a down payment on the next property so I won't make this interest mistake twice...

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1 hour ago, XxRaVeNxX said:

Is it worth it to rent..

Here is what you need to really think about before doing this:  even if you hire a property management company to handle the leasing and management you need to have at least 6 months preferably a year's worth of mortgage payments saved up.  You could be fortunate and have the perfect tenant from the get go.  BUT, if you don't get a reliable tenant and they default it could take months to get them out depending on the laws of your state.  Make no mistake about it there are professional deadbeat tenants out there who know exactly how to game the system and live just about rent free for months on end.  Worse they often trash the place before finally leaving.  Can you afford to repair all the damages?

 

You would need to check your home owner's insurance.  The premiums could increase dramatically if you rent it out.

 

Bottom line is can you afford your rent and the mortgage for months on end if this goes south?  If you will be scraping by each month then renting out the home could be high risk.

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How soon do you have to make a decision?

 

Where are you going to live if you move out and rent the home to someone else?

 

8 hours ago, XxRaVeNxX said:

a down payment on the next property so I won't make this interest mistake twice

Whatever you decide, I'm really glad to see that you'd do this differently the next time. 

 

"No down payment" sounds like the mortgage company is doing you an enormous favor -- until you need/want to sell within the first few years but can't unless you kick in thousands of dollars to ready the property for sale, pay the REALTOR(R) commission and pay off the mortgage. 

 

It's even worse when the mortgage company does you another "favor" and rolls your loan costs into the mortgage, which only puts you further behind from the day you move in.  (not saying you did this)

 

Also, as you've probably realized, "no PMI" also sounds like an enormous favor until you realize that they've just baked the cost of PMI into the rate.

 

8 hours ago, XxRaVeNxX said:

I did it with no money down via Navy Federal Credit Union and my interest rate is at 5.125% yet with no PMI

Good luck with your decision.

 

 

Edited by cv91915
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12 hours ago, CreditSucksNot said:

You would need to check your home owner's insurance.  The premiums could increase dramatically if you rent it out

Not only that, but depending upon your state and locality, you might find your property taxes dramatically increase. You will lose any homestead exemptions for primary residences. There might be different property tax rates for income producing properties vs. residential properties.

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1 hour ago, DollarDog said:

The first question is why do you have to move?  If you don't, don't. 

 

Purchasing a house shouldn't be a short-term plan. 

 Literally increasing my income 2x fold. Puts me in different income bracket entirely. It's worth it to move. 

  

5 hours ago, cv91915 said:

How soon do you have to make a decision?

 

Where are you going to live if you move out and rent the home to someone else?

I already live somewhere else. The property management sent me an e-mail yesterday of things that need to be fixed to get it market ready. 

12 hours ago, CreditSucksNot said:

You would need to check your home owner's insurance.  The premiums could increase dramatically if you rent it out.

 


Landlord insurance is currently on the home - it's actually cheaper for me for whatever reason. 

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2 hours ago, XxRaVeNxX said:

 

 I already live somewhere else. The property management sent me an e-mail yesterday of things that need to be fixed to get it market ready. 

 

Unless the loss would be substantial (hard to know with home sales right now), I'd be looking for an exit.

 

Based on your earlier posts, you'd have to have long-term, low-maintenance tenants to do much more than break even. 

 

Wouldn't be worth a gamble with my money.

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On 4/23/2020 at 11:27 AM, cv91915 said:

Unless the loss would be substantial (hard to know with home sales right now), I'd be looking for an exit.

 

Based on your earlier posts, you'd have to have long-term, low-maintenance tenants to do much more than break even. 

 

Wouldn't be worth a gamble with my money.



But wouldn't repairs be tax deductible and wouldn't any issues come out of the deposit that aren't covered?

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1 hour ago, XxRaVeNxX said:

But wouldn't repairs be tax deductible and wouldn't any issues come out of the deposit that aren't covered?

SOME repairs are deductible.  Not necessarily all or the ones you do.  You can only hope and pray that the damages the tenant does to the property do not exceed the deposit.  If they do your only recourse is to sue the tenant and even if you win it doesn't mean you ever collect.

 

The problem with your plan is you are basing it on the assumption that you end up with tenants who pay on time in full every month and take as good or better care of the place than you have.  Chances of that in this economic uncertainty are not good.

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2 hours ago, CreditSucksNot said:

SOME repairs are deductible.  Not necessarily all or the ones you do.  You can only hope and pray that the damages the tenant does to the property do not exceed the deposit.  If they do your only recourse is to sue the tenant and even if you win it doesn't mean you ever collect.

 

The problem with your plan is you are basing it on the assumption that you end up with tenants who pay on time in full every month and take as good or better care of the place than you have.  Chances of that in this economic uncertainty are not good.

What you just described is the exact same gamble that anyone takes when they rent their home, no?

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14 hours ago, XxRaVeNxX said:

What you just described is the exact same gamble that anyone takes when they rent their home, no?

Yes, but do not assume that because the risks are equal, so are the rewards. 

 

Using your numbers, the max upside if everything goes right is $1,920/year, pre-tax. 

 

Absent some major compensating factor (realistically high appreciation potential on the home, for example), I wouldn't touch that with the s#!tty end of a stick.

 

I would also pause and look at all options if selling now meant taking a huge loss and I was short on cash.

 

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