Nothing comes without potential risk. Leasing your home also requires analyzing in advance if the rent will be sufficient to cover your mortgage payment, taxes, insurance, gardener, other maintenance and management fees.
Before going too far, have your eyes wide open to know that even with a maximum 2 months rent security deposit for an unfurnished home, damages can easily exceed that amount, especially when you factor in the potential of unpaid rent that always might be a possibility. That said, even the best of tenants rarely live by the same elements of love and care for a home as a homeowner with pride of ownership would take.
Before jumping to any conclusions, first consider your long term plan.
1.) Will you move back into the home perhaps in a year or two years? If the plan might be “yes”, are you quite certain that those plans may not turn out different? A plan to move back in might be worth all the other risks but you really need to feel certain.
2.) Is your only reason for leasing your home to hope for a higher selling price later? This is a difficult conversation, because no one has a crystal ball. Prices are actually still very strong and despite a higher percentage of people unemployed, the inventory of available homes for sale is extremely low. One has no way of knowing how long interest rates will remain at the lowest in the past 40 years and where interest rates may be at the end of your lease.
3.) When your lease ends, inventory may be higher and interest rates may be higher as well, pushing a sale possibly off again, still not knowing what the market may be like at the end of another lease period. And who knows how much vacancy you might face between your first tenant and the next tenant you advertise for? Of course, things could go in the much hoped for direction by finding the perfect tenant immediately, willing to pay a high rental amount, never missing a payment, never paying a day late, and vacating at a perfect time to sell where demand is strong, employment is back to over 90% and interest rates are still extremely inviting. All that weighed back and forth, I would recommend the following.
A.) Attempt to sell your home first with the goal to get a good price and without gambling on the future. Examine the market and price according to reliable comparable sales.
B.) After giving it a reasonable marketing period, then consider leasing your home, but only to a really well qualified tenant, even if the rental price is a tad less than you hoped for. Remember the quality of your tenant is very important. Also remember holding out for a higher rent and in the mean time keeping your home vacant for two extra months is mathematically stupid. Sorry for being so blunt, but I see it often that a landlord looses $5,000 in rent due to vacancy, for an extra $300 per month. What happens then, (lease or no lease) when the tenant moves out in 10 months?
Always look at the big picture. You can hope for the best, but expect the worst. Being a landlord is not always a walk in the park. You might have a great experience but many landlords, especially recently have said, “It’s not for me…life is too short”. Please call me to further discuss the pros and cons and more important to discuss your personal goals and needs. Ron Wynn (310) 963-9944. firstname.lastname@example.org