Renting out your house might be something you’ve been thinking about for a while but can’t seem to make up your mind about. Don’t worry, it’s natural. Leasing your property to someone you don’t know can be unnerving. However, if you do it right, it can be one of the best financial decisions you have ever made.
There are several situations where renting out your property may be a good idea. Most owners decide to rent if they can’t find buyers and others when they owe too much to sell. You could also be thinking about renting because you’re being transferred at work or relocating permanently.
The best reason to rent out your house, however, is to build wealth. Real estate investing is an excellent field to get into for anyone looking for financial freedom. Even if you don’t have the money to acquire dozens of properties, renting out is the perfect place to start.
Turning your property into a rental has many financial benefits. Let’s look at what you stand to gain from leasing out your place.
There is a common belief that buying a home automatically makes it an asset. This is not true. For anything to qualify as an asset, it must generate revenue. Unless you are planning on reselling the house at some point, it is not an asset and does not contribute much to your net worth.
Renting out your house turns your property into an income-generating possession. You can grow your cash flow immediately if you rent it out for an amount that is higher than your bank loan payments. When you finally pay down your debt and own it, your cash flow will continue to increase.
One factor that makes leasing property better than reselling it as soon as you can is appreciation. It takes time for houses to increase in value. Sometimes it takes many years depending on the location, type and size.
Leasing not only gives you a way to pay your mortgage while getting some cash flow, it also lets you keep the property until it is worth more. If you rent out the property for 5 or more years, you can get it paid off and resell it at a much higher price.
If you’re serious about real estate investing, you are going to need more than just one property to make millions. However, getting funding for multiple properties can be difficult. Leasing provides cash flow that you can reinvest to grow your portfolio.
Take note that leasing does not automatically generate positive cash flow. You need to first calculate the fair market rent to charge your tenants and deduct expenses to find out how much you will earn.
Cash flow from your rental property will be affected by numerous factors. Some of these include the location and type of property you are renting out, repair costs, maintenance, property taxes, financing costs, the real estate market and so much more.
One of the best benefits of leasing your house is that it provides security. Life can be very unpredictable. You could lose your home to natural disasters, divorce and other unfortunate circumstances. Since you’re leasing and not selling, you will always have a house to go back to if you ever find yourself homeless.
Although leasing property has its disadvantages, they are outweighed by the benefits. If selling your house is not on the cards just yet, consider leasing in the meantime to earn additional income and to get your start in real estate investing.
Now is the time to rent out your property in the real-estate market, especially in Miami. OMG Brokers specializes in helping prepare you for this process and ensure your home rental goes as smoothly as possible. We know you’re ready to rent out your property, and our team of qualified agents is here to help you do it!