When you decide to move, you can sell or rent your home. Costs are involved in renting a property as well as selling one. Keep in mind that any rental income must cover the mortgage and maintenance costs in order to keep you solvent.
To help you decide, examine what comparable homes are charging and compare that to the expenses of owning and managing the property. This includes mortgage payments, upkeep, repairs, taxes, and even hiring a property management firm. Then calculate how much rental income you can anticipate.
To ensure the house is suitable for renters, you must do periodic upkeep. As a general guideline, budget at least 1% of the home’s worth annually for upkeep (more if it’s an older property). Although local tax rates vary wildly, you should anticipate an increase in the pace as the assessed value of your house grows.
You’ll need to spread the word to get a renter. Consider any marketing expenses you may have, such as publishing and advertising. Potential tenants’ background and credit checks may also cost money. However, you may be able to pass this cost on to the tenant. Typically, prices fall between $15 and $40.
It will cost money if you need to engage a property manager. These businesses often charge a portion of the rent, typically 10%. Even if you maintain your books for rental-related expenditures, you’ll probably have to pay for tax preparation software or an accountant if you need to file your taxes. You will also be responsible for paying HOA dues if your house is part of a homeowners organization. These costs may range from $200 to $2,500 each month.
Certain expenses, such as damage to the house or injuries sustained on the property, may be covered by landlord insurance. This will likely cost around 25% more than the standard home insurance plan. Also, take into account the expense of tenant vacancies. You lose revenue if a renter vacates and you don’t have a replacement.
You’ll need to spend money on a few services to make your house ready to sell. These can include completing required repairs and improving the property’s curb appeal. Consider having a pre-listing inspection, which would increase your expenditures.
Although it is not necessary, staging your house may make it more appealing to prospective buyers and boost the amount of money you make. The price of staging may range up to $2,500 or more, depending on your home’s size and other considerations. You are still in charge of paying your home’s utility bills until the closing date. Under certain circumstances, you might have to pay extra closing expenses and legal fees.