3 ms·

Some people say "oh you can always rent the house out!" but they often forget that once they move away and have to hire a property management firm, the fees tha

Some people say "oh you can always rent the house out!" but they often forget that once they move away and have to hire a property management firm, the fees that they'll have to pay will erode the rent revenue below breakeven with the mortgage payments (without such a manager, you can frequently break even or better vs mortgage)

vonmoltke 12y ago
First, it depends on the rental market. Unless the local housing market deflates, after several years you should be able to get more than your expenses in rent, even after giving the management company their 10% (or whatever it is in your area). Second, the break-even point is based on the principal to interest split in your payment. That is a function of your loan term and how deep into the term you are.
sliverstorm 12y ago
I don't think people necessarily see that as a perfect solution in which they make a profit. If you can come close to breaking even by renting it out, that gives you more runway with which to sell the place. Reduces the time pressure, so to speak.
gnoway 12y ago
In at least one US State, your property taxes are different if you're living in the home vs. renting it out. In my case, losing the homeowner's exemption would almost double my property taxes. I'm not sure if you get to deduct property taxes for non-homestead property on your federal return either. In my case, losing this deduction would force me to use the standard deduction instead of itemizing. So, a possible double-whammy. edit: note this is for the US.
- quesera 12y ago
  > I'm not sure if you get to deduct property taxes for non-homestead property on your federal return You can. Property tax goes on Schedule E as a business expense, just like insurance, utilities, repairs, etc. You can also deduct mortgage interest for rental properties.

3 ms·

Some people say "oh you can always rent the house out!" but they often forget that once they move away and have to hire a property management firm, the fees tha

by hkmurakami 12y ago

vonmoltke 12y ago
First, it depends on the rental market. Unless the local housing market deflates, after several years you should be able to get more than your expenses in rent, even after giving the management company their 10% (or whatever it is in your area). Second, the break-even point is based on the principal to interest split in your payment. That is a function of your loan term and how deep into the term you are.
sliverstorm 12y ago
I don't think people necessarily see that as a perfect solution in which they make a profit. If you can come close to breaking even by renting it out, that gives you more runway with which to sell the place. Reduces the time pressure, so to speak.
gnoway 12y ago
In at least one US State, your property taxes are different if you're living in the home vs. renting it out. In my case, losing the homeowner's exemption would almost double my property taxes. I'm not sure if you get to deduct property taxes for non-homestead property on your federal return either. In my case, losing this deduction would force me to use the standard deduction instead of itemizing. So, a possible double-whammy. edit: note this is for the US.
- quesera 12y ago
  > I'm not sure if you get to deduct property taxes for non-homestead property on your federal return You can. Property tax goes on Schedule E as a business expense, just like insurance, utilities, repairs, etc. You can also deduct mortgage interest for rental properties.