Lately we have done many posts on the “stuff” we have and the house is just another one of those items. For the past couple of years we have been going back and forth on whether or not we should sell the house or rent it out when we leave to travel. In the beginning we leaned heavily toward selling the house and everything in it in order to increase our budget. However, after talking with the kids and thinking about the cost of replacing major household items, we are thinking it might be better to rent.
Pros for Renting
- Security. If we run out of money or find this type of travel is not for us it would be nice to have a place to come back to.
- A college fund. Paying off the house in twenty years gives us equity that can be used to help pay college tuition.
Our friend and realtor Kathy Murray helped us to answer some of our rental questions. Here is what we found out on the positive side:
- Property Management Service. You should use one. Most services charge at least 10% of the rental income each month. Here is what you get.
- They collect all rents.
- You can have your money automatically deposited or it can be mailed to you.
- They provide monthly statements.
- personal online access to view your account, statements and all documents.
- oversee all repairs 24 hours/ 7 days a week.
- Monitor the property and HOA covenants.
- Provide end of year 1099.
- provide annual summary of expenses.
- Broker Fee. This fee is 100% of one full months rent and is taken from the first months rent. Here is what you get:
- Marketing of your home: MLS, national and local pool of tenants, multiple photos and detailed property description.
- Background check which is very thorough and includes all things regarding finacial history, employment history, as well as a criminal search to include sexual predator, federal terroist and most wanted list. YIKES and thank goodness.
Cons for Renting
- Unanswered questions. There are still questions for which we do not have answers:
- Home warranty. How does this work and is it even worth it with a rental? Does this cover appliances? Do I leave my appliances?
- Home owners insurance. Does it rise when you become a rental property?
- Property taxes. Do they rise when the property becomes a rental?
- How often do the property managers visit the house? I really don’t want to come back to a house that needs a ton of repairs. We are going to be on a tight budget when we return.
- Is it possible to rent the house furnished? Is this common or weird?
- Do we need a reserve of money set aside for renting the house? If so, how much? This brings us to another thought. How will we save this money on top of what we are already saving?
- Lawn care. Enough said.
- Worries. If we rent the house, this will be something on our mind and another item we will need to deal with as we travel.
- Time. As I sit down and work on these blogs, I am discovering that time is a very precious commodity. How do we get the questions answered, the house rented and still keep doing everything we do?
- Repairs. Which of course need to be done if you are selling or renting. At least with selling, hopefully, you make the money back. We are on a tight budget right now, so how will we afford to do the repairs, repaint, re-carpet etc. Are these things most tenants expect when renting a property?
Pros for Selling
- Mortgage rates are low. Our house is in a good location with good schools around it. Houses in my neighborhood are selling quickly.
- We would be done with the house and would not have to worry about it while we are traveling the world.
- We would have the extra income to put into a savings account. We could use the money for a down payment on a house when we return or as the start of a college tuition fund for our kids.
- We could use the extra cash to extend our traveling time or add events or locations to our travels without having to watch our budget as much.
Cons for Selling
The biggest con for selling our house is lack of security. Ryan and I have often said to each other if it was just the two of us, we would have no problem selling everything and taking off. But because our kids are involved we want to be sure that we provide some security for them as well. We want to be sure that they feel as though they are apart of this process and their opinions matter. They of course would like to keep their house. This is the only house they remember living in.
We have presented the dilemmas, put them in writing and still have not made a definitive decision. Send in your thoughts. We always love an outside view and opinion.