DENVER - With rental rates skyrocketing, many homeowners may be asking themselves: "Should I rent my home instead of selling it?"
Realtor Wade Perry knows first-hand the ins and outs of being a landlord. He owns a commercial property, which he rents. He has also advised colleagues, who rent their residential properties.
Perry says there are three key elements in determining if you should rent your home. First and foremost is the emotional side. Perry advises you ask yourself the following:
- Can you handle midnight meetings with repair workers?
- Are you prepared to run background and credit checks on your tenants?
- Are you prepared to have a stranger living in and taking care of one of your largest assets?
If, and only if, you can answer yes to those questions, you can move forward with the legal and financial aspect of being a landlord. Here are those checklists:
Determine Your Budget
- What are the rents in the area?
- How much is your mortgage?
- How much extra cash do you have to handle vacancies and repairs?
Hire a CPA, who understands:
- Tax treatment of income and depreciation
- Capital gains scenarios
- Set up a separate bank account
- Have a contract/lease that addresses evictions
- Establish an LLC to limit your personal liability
- Have an umbrella insurance policy
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