In the current real estate market we are seeing more people who are deciding to rent their existing home so they can move forward with their life plans. Some have owned their homes for a long time and others bought during the "boom times" and are still underwater but can rent their homes for as much or more than what their mortgage payment is.
We aren't able to do property management through RE/MAX because they do not allow it. Property management is the most litigated area of real estate so you do want to watch your step but it can be very profitable to rent out your own home.
We are able to help you find a tenant, run a credit/background check on them, and provide you with the applications, lease, and addendums and discuss the procedures with you. We also help you set the rental amount based on current market rates. The cost for this service is minimal, about one month rent.
When you live in your home there may be things that you get used to. For example, we just helped one of our clients rent out her condo, I'll call her Jenn, so she and her fiance could buy a home together. Jenn's going to be able to write off her fix-up expenses as well as depreciate the home on her taxes to save her money plus she is making more than the mortgage payment in rent so the situation is great financially!
Jenn has run into a few surprises though since she moved out. One item was an outdoor light that isn't working. Wasn't a big deal for Jenn when she was living there and she forgot that it wasn't working so now she needs to fix it for the tenant.
Also the washer and dryer are tripping the breaker. When Jenn was living in the condo, she put the dryer on a lower heat level because it would get too hot and trip the breaker. After this simple modification, she didn't give it any more thought, but now that the tenant is in the home, there is potential liability there and Jenn needs to address this. Jenn had a friend of a friend come by to check on it and he said to buy a different dryer that doesn't have as high of a heat level. That doesn't make much sense - if the dryer is tripping the breaker, that means there is a problem with the BREAKER. This could be a fire hazard so now Jenn is bringing by a master electrician to fix the breaker.
There is a list of these little things that Jenn is working on fixing this week for her new tenant and it really can be frustrating, especially since there are so many things that need to be done on the new home.
If you're considering renting your home out in the future and buying a new home, give me a call and we can discuss things that you may want to plan for. I can't manage your property but can share some stories about my clients experiences and what you may expect. Some of my clients buy a 1 year home warranty from HMS for $409 and in the lease they put in that the tenant is responsible for the cost of a service call so when something breaks, they can call the home warranty company directly on their 800 number and the repair people come out and fix it for that service call fee. Saves you from those middle-of-the-night calls (which are not as frequent as the horror stories you may have heard!).
You'll also want to consult your tax preparer to see what you may be able to write off. Legal questions will need to be answered by an attorney.
There are a lot of potential pitfalls but it can be a great way to help build your overall wealth and add to your retirement plans!
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To list your property for sale or to purchase a property in Anne Arundel or Howard Counties as well as parts of Prince George’s, Calvert, and Montgomery Counties, call Lisa & David Webber, Licensed Realtors® at 410-320-0242. For more information on our services, please visit our profile or our website.
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