Because of steadily rising home prices and an uncertain housing market, more and more people are turning to rental properties. According to a recent study, homebuyers are paying up to 39% more than baby boomers were in the 1980s — so it makes sense. If you’re able to purchase a property, or already have one that you don’t currently reside in, renting out your property can be a very advantageous move.
Before You Purchase a Rental Property — Are You Ready?
Although owning a rental property comes with numerous benefits, it can also be a risky move if you’re not ready. Ask yourself the following questions to make sure you’re prepared for all that comes with owning and managing a rental property:
- Do I know how to find reliable tenants to rent my property?
- Is my property in a desirable area that will draw attention to it?
- Do I know my property’s current value?
- Do I understand the market’s current conditions, and how that will impact my ability to rent out a property?
- Am I able to get by financially without depending solely on income from renting?
If you go through these questions or come up with others and still feel confident about your answers, you should feel good going forward with purchasing a property to rent.
Earn Passive Income
Renting out a property can be a perfect way to earn passive income with relative ease. Renting out one or multiple properties consistently can secure you additional income for many years to come. Even if you charge a low rent, or need to use some of the money to place back into the property, you’re still going to be receiving a decent chunk of change each month.
This type of income-earning situation is great as an additional job or to help you secure yourself as you settle into retirement or go back to school. Just make sure you aren’t continuously putting more money into the property than you are getting out of it.
[Related: Guide to Buying a Home in Seattle]
Write Off Taxes
Although owning a rental property comes with its own set of taxes you have to pay since you’re receiving rental income, if you own a rental property, you are also able to deduct certain taxes.
Here are some categories where tax breaks are available to landlords for the necessary expenses and upkeep of a rental property:
- Repairs for upkeep
- Travel time between properties
- Home office costs to manage your landlord duties
- Interest on loans used to acquire or improve rental property
- Employees and independent contractors hired
- Insurance premiums
- Other operating expenses
Increase Property Value
Another benefit of owning a rental property is seeing your property’s value increase. Your property can gain value and appreciate with time if it’s located in a nice, heavily sought out location. You can also increase your home’s value by upgrading your property, including landscaping, exterior and interior painting, adding new siding, and so on.
[Related: Can I Afford to Buy a Home in Seattle?]
Take Care of an Extra Property
If you come into ownership of an extra property via inheritance, or already have a space you won’t be using for a while and don’t want to sell for sentimental or other reasons, filling it via renting is a good idea. Vacant homes are easy targets for vandalism and squatting. If you rent it out to a reliable tenant, then you can rest assured your property will be safe and well taken care of.
Rent Until You Can Sell
Are you considering selling your property? While the market is unreliable, why don’t you rent instead? Renting a property until the market stabilizes is a great way to continue to make income while you wait for the perfect moment to sell.
Owning a rental property can feel great. You have control over who you decide to rent to, how much you charge, and how long they get to stay. You’re the one who chooses the upgrades and how you want this particular property to look. Confidently manage the property and make the right decisions, and feel pride in being able to help someone else out in their journey toward finding a home.
Do you have any questions about homeownership, or the steps it takes to become a rental property manager? Seattle Mortgage Planners can help you with that, and a lot more. Contact us today to get started.