It is fairly common knowledge that real estate is a terrific investment. It seems tempting, if not ideal, to keep a home and rent it rather than sell it. But it is not always that easy. Here are some things to keep in mind.
Are you prepared to be a landlord? It sounds cool to own investment property and be a landlord, but are you really prepared for it? There are many responsibilities that go along with being a landlord. Getting calls that something is wrong at whatever time of day or night, keeping up with local regulations, applying for and obtaining permits are all part of being a landlord. Each township has their own requirements for obtaining rental permits. Some charge a fee and have inspectors go through your house to be sure that it meets their standards. Required permits are necessary to have rental houses placed on multiple listing service.
There are other financial considerations as well. Can you carry the house when it is vacant and there is no rent coming in, and the mortgage as well as other expenses are still due? Sometimes houses rent quickly, other times it may take a few months. Worst case scenario, you have a tenant who can no longer, or decided not to, pay rent. There is a strict and lengthy process to evict a tenant from your house. As of now, due to Covid, evictions are prohibited.
One thing also to remember is that your house is no longer your “home”, but an investment property. No longer are decisions emotional and about your taste, but they are business decisions made to increase the value of your property. Things that you found appealing about your home may not be appealing to a tenant. Your favorite mauve paint in the living room may need to be made into a more neutral color to appeal to tenants.
If you are willing to let go of the emotions, there are plenty of upsides to having a rental property. If you have owned your home a long time, your mortgage should be lower than a recent purchase and should yield more profit. Even better if you own your home outright. The extra income can be used to improve your own lifestyle or can be used for additional investments. There are also positive tax implications for improvements and expenses for rental properties. In general, barring a correction, the real estate market will appreciate over the years. Your investment should continue increase in value, while you receive tax deductions and income from the rent.
If you are up to the challenges of rental properties, it is a great investment.
Edith Pulizzotto is a Real Estate Salesperson with Daniel Gale Sotheby’s International Realty. Edie has many years of experience as both an agent and as a landlord.
Edith (Edie) Pulizzotto, SRES, CBR, RSSP, CIREC
Real Estate Salesperson
Daniel Gale Sotheby’s International Realty
5 Main Street, Cold Spring Harbor, NY 11724
Cell: 631.793.1142 Office: 631.692.6770