Rent-to-own, or lease purchase, is a home-buying option that doesn't get a lot of attention,…
If you’re on the fence about renting your home or selling it, talk to a realtor. Selling is typically a long term option and renting is a more temporary solution, but a litte research will go a long way, so check out your local market and think about your future financial goals.
But what if you’re till not sure?
Rental Demand Is High
If your area is short on rentals, you might want to consider the landlord business. Many people like the flexibility of renting or are uninterested in purchasing a home. Work is more flexibe than it’s ever been, allowing employees to work from home and that means they can live anywhere they have a reliable internet connection. If you live in an up and coming neighborhood in your city, a higher-end area of town, or own a nice cabin in a rural area, but you’re ready for a change in location, you should consider renting because these are the homes renters want and they are increasingly hard to find.
Your home could be a renter’s dream home.
Who Doesn’t Like Extra Income?
Not everyone is ready to own a home, but everyone needs a place to live. If you have the property, why not invest in your home to provide a residence for lease? You’ll make a profit while the renter has the safety and security of a house. After the initial startup of advertising the property for rent, drawing up a lease, and completing any maintenance work, you’ll have a passive income stream that requires very little of your attention. Once you are well ahead, you can use some of that extra cash to build a bigger property portfolio, save in your 401K, or even retire early!
You already own one home, so you’re undoubtedly familiar with the tax breaks included with homeownership. Imagine two or three or more. If you’re owning and managing multiple properties, you become employed by yourself. You also have additional benefits of writing off any operational expenses as well as all maintenance activities. Keep meticulous records and consult with a tax professional for additional advice on tax incentives.
Making Your Property Work For You
Buying a second home and turning the first one into a rental property comes with some risk, but banks will likely consider your request for a mortgage on a second home when you show you can easily cover both mortgages. Showing your banker proof that you can cover both mortgages by increasing your savings and shoring up your debts improves your chances of loan approval, but if you’re a reliable lendee who pays their mortgage on time, that history along with proof you can afford another mortgage, will weigh heavily in your favor in obtaining a new home loan.
The Bottom Line
When you choose renting over selling your home, you invest in your community. You provide safe and affordable housing in right in your own neighborhood. When you invest in your own home, you are dealing with a known property that requires much less investment to make it ready to rent, creating consistent cash flow for yourself and affordable.
The security of a steady income stream can resolve a lot of personal stress. Saving money for a rainy day or to invest in another property opens doors for more opportunities for you. Conversely, if your personal situation changes, you still own a home and can fall back into it as leases allow if you find yourself in need. When you invest in your home, you have the flexibility of managing your own business. You are the boss. You get to make the decisions on contracts, terms, and selling and buying assets.