My wife and I are looking at a new house in about 7 years. I am debating renting out the house instead of selling. As of today, we owe $260,000 at 3%. It is valued $360,000. In 7 years we will have 20 years left on the mortgage.
I am entertaining the idea of renting out the house instead of selling. Is anyone here a landlord? What is your experience as a landlord? Are there a lot of expenses and stresses? Would it be easier to just sell the house and put the money towards another house?
In your perspective, I should avoid a rental unless I can pay off the loan. I can’t predict the future, but that would be unlikely. Selling and getting the equity is a better value proposition.
I wonder if anyone else took the leap and rented a house they owned while having a mortgage.
I have been investing in real estate for 25 years, mostly in single-family rentals and vacation properties. The first question I would ask any potential landlord is could you evict someone that doesn’t pay you. If the answer is no then you are done…no reason to go any further. The next question would be if you will live near the rental property. If the answer is no then you are done…no long distance land-lording for your first property.
After your response on these 2 questions, then we can talk numbers.
I did exactly that: I bought my 2nd house and kept the first one and rented it out. I would never do it again. There are far easier ways to make money. Things will break, and you will get calls and be under the gun to fix them. Your tenants will not see (ignore?) signs of issues, and small things will become big things. They won’t care if/when the gutters are cleaned. In short, they won’t treat the house like a homeowner would, no matter how good a tenant they are. My 2nd house was only 40 minutes away, and that was too far. Then some day you will sell the house and have to roll it into a new house or pay capital gains. I don’t know why anyone would be a landlord in the states where evictions and rent increases are becoming more and more regulated.
Thanks for the insights. Just from these three posts, it sounds like more of a headache than what it is worth. I think I will avoid being a landlord. I’ll just use the equity in my house on my next house and avoid the headaches.
Excellent answers. I’m a retired attorney and saw lots of suffering by my real estate landlord clients over the years caused by miserable tenants. My perspective may be unduly pessimistic because my clients contacted me only after something bad had happened. I’ve never been s landlord and have no intention of ever becoming one.