Three years ago, I wrote a post titled, “Housing Allowance: Buy or Rent?” We bought. Now we are moving to a new church and we are faced with a follow-up question: Sell or Rent? We are leaning toward renting our house out. Here are some of the things we have been thinking through:
- Future Home:
We are being appointed to a church that has a parsonage. I am not sure that matters too much, but it does take some of the pressure off of us to sell the house we have now. We do not have to worry about qualifying for two mortgages, or being a renter and a landlord at the same time.
- Is it feasible to sell?
The good news is that after three years, we owe what the house is worth. The bad news is that when you add closing costs and Realtor commission, we would probably have to bring close to $15,000 to the closing table, and we certainly do not want to do that! So, it looks like we will decide to rent the house out to someone and let them pay our mortgage for a little while.
- Is it feasible to rent?
The rental market in our area is typically very good. We feel like we should be able to cover our mortgage payments. We would have to pay out of pocket for any odd maintenance expenses that pop up as a landlord. It looks like that would still be less of a loss than selling the home at this point in time. We have never done this before, so we really do not know what to expect!
- Should we rent by owner or use an agent?
We considered renting it our ourselves, but we will be living four hours away. That would make it a chore to manage the rental. We met with a property manager who charges a modest fee for handling payments and making sure things get fixed. We are leaning toward property management.
- What are the tax implications?
We will lose homestead exemption, so our property taxes will double. We will have rental income, so that may send our income tax and social security skyrocketing. I do not know anything about how rental income will affect my taxes. I will have to find a good tax person when I move to help make sure I am handling taxes properly.
This is new to me and far from my field of expertise. Does anyone has anyone out there have any pointers on renting out their house? Is there anything in particular that I need to consider before I list our house for rent? Somewhere down the road I will have to update this post with whether or not we made the right decision.