Just as it is all over Denver, the Goldsmith real estate market is hot right now. Home values continue to rise, so it can be a great time to sell. Or it can be a great time to hold on to your investment as its value will likely continue to rise. But if you want to purchase a new home—whether you are in the market for a bigger family home or looking to downsize—you might consider holding on to your current one. Does it make more sense to hang on to your home in the current market
and rent out the property—or should you sell it?
Let’s take a look at what you should consider when making this decision.
Why Rent Out Your Home?
If you rent out your home, the rent you charge tenants should be enough to cover your monthly mortgage payment. So essentially, your tenant is paying for you to build equity in the home. Rents in Denver have gone up in recent years, so you might even make additional money beyond your mortgage payment, so this is income.
What About the Costs of Renting?
When you rent out your home, you will still have to pay for maintenance, taxes, and so on. You will also want to invest in landlord insurance, which will cover tenant damages or if someone is injured on your rental property. There are costs associated with finding a suitable tenant, such as background checks, advertising, and so forth. If you decide to hire a property management company, be sure to add in these expenses.
You can download a free worksheet
from HouseLogic to help you estimate the costs associated with renting your home.
Can You Afford to Finance Another Home Without Selling Your Current Home?
Obviously, if you need the equity from your current home in order to afford to buy a new home, renting out your current home may not be doable. It’s a good idea to meet with a financial advisor who can run the numbers for you.
You will also need to consider the tax ramifications of renting out your current property. The money our tenant pays you will be considered income, and this can greatly impact your taxes each year.
Can You Deal With the Stress of Being a Landlord?
Being a landlord can be a time-consuming proposition. Before you even rent out the property, you’ll have to advertise the home’s availability, show the home to prospective tenants, and run background checks on them. You will get calls from your tenants for maintenance and repair requests. The entire process can be emotionally draining. You can hire a company to manage your property, but this will eat into your rental income by at least 10 percent.
If you’re thinking about listing your home, Elevation Realty can help. We can tell you more about the Goldsmith market and whether it makes more sense to sell your home before buying a new one, or if renting it out makes more sense. Contact
the Elevation Realty team when you are ready to sell and want to find your dream home or give us a call at 303-579-3566 to begin your search.