how do i know what to rent it out for? also my mortgage went up because i thought we'd move out by 2 years so now that we're a little behind i decided not to refi since i thought we'd be selling. however its a tough market so we may have to rent it out. should i refi to get the mortgage payments lower before i rent it since the mortgage is definitely high for our home. i need advice and ideas of how to maybe rent but make a little money too. anyone rent out there and how do you work it and figure out what to make the rent amount?
2007-08-06 09:08:14 · 6 answers · asked by toolate 3 in Business & Finance ➔ Renting & Real Estate
Do you think, based on the national average of 7 yrs, the location of the property, and shape that it's in, that it will double in value? If so may I suggest something a little outside the box. Refi into interest only, no pre-pay penalty payments. Try to get half back in rent (if you get more- bonus). The rest of the balance you should be able to get back from your tax return from writing off the mortgage and depreciation. If you can create at minimum breaking even until the property value doubles, then you can refi and pull of the equity out. If it is worth $200,000 now you would be able to pull out $200,000 of TAX FREE money. The only real risk is if you think that the property will not appreciate very well, but if you are breaking even then there's no real loss anyway.
Rental property can be a great investment, but don't get too caught up in trying to get the rent payments to match the mortgage payments. It usually doesn't happen unless you have paid down more than half of it already - and don't forget about your deductions.
Good luck.
2007-08-06 09:46:44 · answer #1 · answered by B . 2 · 1⤊ 0⤋
My ex was thinking of renting out the house after we split up, though he never ended up actually doing that. We'd worked out that comparable rental houses in our city would cost about $300-500 more than the mortgage and taxes on our house each month. (We knew this because we checked the ads in the paper, and I'd been shopping around for a place to live.) This seemed great at first, but then after considering the potential problems, such as having tenants who failed to pay the rent and having to take them to court, having our property damaged, having the property vacant for a while, or needing to make unexpected expensive repairs to the house if the furnace or something broke, it didn't seem worth it to either of us.
If I were you and I were going to rent out the home, I guess I would refinance the mortgage and just put whatever money you make on the house (over and above the mortgage payments and taxes and whatever other monthly expenses) in a separate bank account and leave it alone, so it will be there to cover periods of vacancy or repairs as needed. Since the value of the house may go up and your mortgage principle will gradually go down, it may end up being worth the trouble to you if the real estate market improves and you sell it for a good profit.
2007-08-06 16:32:58 · answer #2 · answered by Ambivalence 6 · 1⤊ 0⤋
let's start with the refi- Yes, refi if you can. but remember even though your loan stayed high, property values are falling because of the high rate of inventory available. You might not be able to refi...in that the value of your property will not match the loan amount. Your collateral (property needs to be valued at or above the loan).
But if you can refi to a lower payment...this would be great for you....so try this first.
When you are a landlord your bottom line is to make money. So if I would suggest charging 15% - 20% above your monthly payment. Also remember when you ask for a deposit, that money must be held in an account (ie escrow account) so that it is there when the tenant decides to move.
Keep extremely good records for your accountant.
go to the book store and get yourself the NOLO books for Tenants and Landlords....they have all the legal forms (applications, 3 day notices, evictions, ealk thrus, etc) that you will ever need. remember to make copies of them and utilize them
good luck :)
2007-08-06 16:15:07 · answer #3 · answered by Blue October 6 · 1⤊ 1⤋
I'm living in a townhouse owned by my brother which was rented by my family for about 4 years. It went well enough--we did NOT do this on our own though--we have a real estate agent set up the agreements, get a faire market price, and find the tenants. Yes there are fees, but it's just so much easier and you are less likely to make a legal mistake if you go with an agent.
Good luck!
2007-08-06 16:16:34 · answer #4 · answered by Virginia E 3 · 0⤊ 0⤋
Check the rental rates in the area. That will give you an idea of what the going rate is. You want to cover the mortgage and make a profit. But you also need to include an amount to be set aside for future maintenance. Eventually something will have to be replaced due to normal wear and tear.
2007-08-06 16:28:23 · answer #5 · answered by bdancer222 7 · 0⤊ 0⤋
Your best bet would be to get a realtor involved. Many people don't know or think that Real Estate Agents only service a purchase or sale transaction. This individual will give you their brokers opinion as to what is the rent in your area. Its also a good fit so they can run credit and other important tell tell signs of a good renter. Your other option is to refinance and get a loan with no prepay. Then you can do as you please with your property at anytime...I have solid rates, should you choose too move forward contact me
2007-08-06 16:15:20 · answer #6 · answered by Anonymous · 1⤊ 0⤋