If you have been thinking of renting your property but are not yet sure if this could be a wise investment for you, there are several factors to mull over. There are numerous advantages to renting over selling, particularly if you think that you may not be able to achieve the sale price you want in the current market. Whatever the reason, it's beneficial to go over the pros and cons to renting property before you begin.
It may be useful to consult with a professional real estate agent who can help you take a realistic look at the local rental market and how to maximise your rental returns. You can get started with this by comparing agents at sellmycastle.com.au, a free, no-obligation service. Find out more about how it works and take a closer look at the advantages of renting with the help of a professional.
These advantages can include the ability to:
- Use rental income to help cover your monthly mortgage other expenses
- Take advantage of negative gearing tax breaks
- Keep your home as an investment while you wait for the market to improve. Keeping your rental long term helps you build equity, and may also give you further investment tax advantages.
- Move away temporarily and then return to your home in the future.
If you haven't purchased a property specifically for investment purposes, it's important to consider how you and your family will feel about this decision. You'll have to come to terms with another party treating your home as their own. This is one of the potential downsides of renting your home, so it is something to think about before signing any contracts.
Tax Responsibilities and Considerations
It's a common misconception that all rental properties pay for themselves. Before you jump into the rental market, it can be helpful to sit down for a discussion with a local real estate agent to find out what realistic level of rental income could be expected. When you've owned your home for a short period of time, the rental returns may not exceed your monthly expenses. This doesn't make your property a bad investment, but it may not be the solution to all of your financial needs either.
However, there are distinct tax advantages to owning an investment property. When you have purchased a new home and are paying a high rate of interest, the tax benefit will also be highest. Those who have significant equity in their homes may not benefit from these same tax advantages. Again, you may wish to have a discussion with a real estate agent before you decide whether renting your home is financially feasible for you. You can choose one who specialises in tax and finance by comparing options at sellmycastle.com.au.
It's important to remember that short term real estate markets can experience temporary ups and downs, and that property investment tends to be best for individuals with a long term goal in mind. Over time, good capital growth can help make up for any short term losses.
New home owners can claim deductions for out-of-pocket expenses, including repairs, cleaning services, depreciation of fixtures, and mortgage interest payments. Many homeowners will want to use sellmycastle.com.au to find a property manager to help them with their rental. This offers numerous benefits, and property management fees can also be claimed as out-of-pocket expenses.
Qualities and Responsibilities of a Landlord
Choosing to rent out your property brings with it a set of responsibilities and tasks that must be completed. You can hire a property management company if you don't have the time or inclination to perform these responsibilities, which could require a significant amount of time and skill. These include:
- Managing tenants
- Advertising vacancies
- Collecting rent
- Following up on late rent payments
- Understanding tenancy laws
- Maintaining and repairing property
Renting your property also carries with it some element of risk, in the event that your property is damaged by bad tenants. Many property owners choose to take out landlord insurance to help protect against this risk. Hiring a property manager to take care of these tasks is also common for property owners, who don't wish to be inconvenienced with constant calls from tenants. If you're interested in renting your property as a purely financial endeavour but don't want to deal with day to day management, it's definitely worthwhile to consider enlisting a property management company.
When It's Better to Sell
Choosing to rent out property is not always the right decision for every individual. Sometimes it makes more sense to sell. This is something you may wish to consider if you:
- Are interested in a short term investment
- Need equity from a home
- Don't wish to follow up on maintenance and repairs
- Don't have the cash required to support two properties
If you're on the fence about whether it's better to sell or rent your property, you could benefit from a consultation with a real estate agent. They can help go through the risks and benefits of each option in your particular situation. With your income, assets, and risk as factors to consider, this can help you reach a decision about the best possible scenario.
You can get started with finding an agent who can help you make this important decision by registering your details at sellmycastle.com.au. Over 5,000 of Australia's most qualified agents have enrolled with this service, allowing you to compare proposals in a user-friendly dashboard format. You can also start preparing your home for showings whether you choose to rent or sell, to maximise your profits.
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