The Kestner Team

SHOULD I SELL MY HOUSE OR RENT IT??

That’s a question a lot of home owners are asking these days!  And, it’s a question that requires a great deal of research before making your decision.

Everyone knows the real estate market is down regardless of what town you live in.  Even here in Nashville where we have a diverse and stable economy, our market is down.  Areas like Las Vegas, Detroit, California, and Florida were hit the hardest with the housing market downturn.  So although our market is down, we are thankful we are fairing much better than other cities.  And I say this because the answer to this question will partly depend on the market in your area.

Ideally, if you as a home owner bought your home prior to 2005, in a market with a stable economy, got a really good deal on it, put at least 10% down on your loan,  and have made improvements to the house since your purchase, odds are you’re in good shape to sell and make a profit.  If not, you may be a candidate for the rental market.

And, that’s truly not a bad thing depending upon your needs.   If you need to move on whether through a job relocation, moving closer to family, etc., etc. renting your home will allow you to get on with your life. 

There are several issues to consider:

1. If you are purchasing a new house, your mortgage lender will allow you to use 75% of the rental income to count towards your gross income which will help you qualify for two mortgages.
2. As a “landlord”, you still get to keep the tax deduction for your mortgage interest, all the repairs you make to the house are a tax deduction, vacancy time is a tax deduction – all expenses involved are a tax deduction.  If you move out of state and need to travel to check on your investment property, the trip is a tax deduction (unless that rule changed – you might need to check with your accountant on that one).
3. Keep in mind, renting the property may not necessarily make you a “profit” each month.  The idea is to get the burden off your back with enough income coming in to allow you to move on.
4. Be prepared to be a landlord for several years until the market increases enough to at least give you a breakeven on the sale of the property.  I’m telling my clients in Nashville to count on 3 to 5 years depending on their circumstances. 
5. Renting your home could possibly help you avoid a short sale or a foreclosure!  Don’t ruin your credit until you consider the rental possibility.
6. Do you want to manage it yourself?   Even if you plan to live in the same town, managing your own home can be daunting.  Do you know how to run a credit report?  Do you know how to scan for sex offenders and criminal activity?  Do you know how to file an eviction and what the rules are?  Do you know how much you can charge for a late fee and when?  Do you have access to a legal and thorough application and lease agreement?  Do you understand the language in those documents? There are COUNTLESS rules involved in managing a property and you do not want to be on the wrong end of a lawsuit.

If you would like to consider renting your home, call some property management companies and talk to them about the rental market in your area.  Here in Nashville the rental market is HOT – I’ve actually had people rent SIGHT UNSEEN because the homes were renting faster than they could fill out the application.  Be sure to read the management agreement carefully and understand the language – ask questions and compare companies.  Sometimes it can simply be the difference in management agreement language, but personalities are important too.

If you own a home in the Nashville area and would like to discuss the value of your property and/or it’s rental potential, GIVE ME A CALL!   I AM HERE TO HELP!

Nina Kestner McIver

Coldwell Banker Barnes

Franklin, TN  37067

615-289-1340

nkestner@comcast.net