If you are in the market for your second home or moving to another country, one question you may ask is, what should I do with my current property? Should you rent it out, or should you sell it?
In this post, we cover why you should rent out your property.
Your rental property can help you not only to pay for your mortgage but also cover your living expenses. It can also be an avenue to break into property investments. Meanwhile, selling off your home could improve your current financial situation, but the benefit may be short-lived.
Find out why you should be renting out your property!
1. Become An Investment Property Owner
Have you always thought about being an investment property owner but didn’t know how to go about it? Now could be your perfect opportunity.
Renting out your first home is a great way to test the rental property market and probably decide whether you should acquire or even build more investment properties.
Assuming you are interested in investing in the housing market but are unsure whether it will be the right decision. The simplest way to go about it is by renting out your property. That would be a less risky approach for testing the rental market than approaching a financial institution to borrow a large investment amount.
2. Use Rental Income To Increase Your Mortgage Repayments
Whether you are a first-time or a repeat homebuyer, there’s a good chance that you took out a home loan to step into homeownership. Now, it’s time to repay the mortgage, and any source of income can help you settle the loan faster.
Rental property is an excellent way of increasing your regular income. You can use the monthly rental payment to pay living expenses or top up your mortgage repayments, settling the debt much faster and consequently improving your credit score.
3. Stabilize Your Cash Flow
Passive income is essential because it enables you to meet the existing financial obligations and save and plan for the future. Typically, understanding your cash flow helps you manage your accounts and ensures you always have enough funds to pay your mortgage and current and future bills.
To ensure a stable cash flow, consider hiring a dedicated property manager. A property manager understands market trends and will handle tenant issues, ensure they are satisfied, and see that rent is paid on time.
Moreover, whenever existing tenants send in their notice of vacating your property, the real estate agent is in charge of seeing the property does not remain vacant for an extended period.
Ultimately, you enjoy a regular monthly rental, which is an excellent advantage to your financial situation.
4. Rental Property Owners Qualify For Tax Deductions
Another excellent financial reason for renting your property is the savings on taxable income. Whilst the government expects you to pay property taxes, you are also saving some money.
As a rental property owner, you can deduct your expenses for managing and maintaining the investment property. Depreciation is also among the tax perks you enjoy when you own a rental property. The depreciation allows you to deduct the costs of buying and improving your property over its useful life, lowering your tax obligations. The tax deductions come as a relief to your tax liability. Therefore, rather than pay outright capital gains and other property taxes that come with selling the property, why not save by only having taxable income based on your rental property?
5. Investing In Rental Market Is A Great Security Blanket
Sometimes, you want to move to a different geographical location to see what new opportunities lie there. You are often unsure how life will unfold in your new place. Therefore, renting your property can be excellent security because you can always return to it.
Besides, in case of an emergency, you can sell the property or take a reverse mortgage, so long as you meet the conditions for a home equity loan.
6. Hold and Sell When There is A Housing Slump
Home values keep changing based on the rental demand and demand for home ownership. If you are buying a new home and unsure what to do with the existing house, renting out your property in Australia is an excellent strategy for holding your asset when there is a housing slump.
Home values are rising! So by renting out your home, the income you receive from the tenant pays down your mortgage balance while your property value increases. Between every tenant and lease terms, you can re-evaluate values and determine whether it is time to sell off the property.
Some property owners are hesitant about renting out their first home. They think that rental property owners experience many maintenance issues, so selling or keeping a property becomes preferable to renting it out.
Fortunately, hiring a property manager can help you with many, if not all, rental management issues whilst you earn a steady income from the tenants. The property manager also gives you general advice on property prices and helps maintain the property on your behalf.
Peace of Mind Property Rentals provides the best experience to property owners by taking care of everything they need regarding real estate property rental on the Sunshine Coast QLD and surrounding areas. Are you planning to rent out your first home? Talk to us for professional rental property management.