Military families are aware that some housekeeping must be done when preparing for deployment. During this phase of transition, take a moment to assess your situation to determine whether leasing or selling your house would be the safest alternative.
Could it be time to consider selling and making a new buy elsewhere? Are you willing to work with a property management company to take care of your property and your renters?
As a landlord, you will want to take the following points into account before making this decision:
Selling Your House
Exclusion for Home Sales
You can be eligible for a tax-free sale of your property for up to $250,000 if you've lived there as your principal residence for not less than two years of the most recent ten years.
This tax allowance increases to $500,000 for couples. The considerable taxes on capital gains reductions may position you in an excellent financial position to make your next property purchase.
Assumption of VA Loan
Have you detected a spike in the regional interest rate? If you purchased with a VA loan, a higher-cost housing market may play to your advantage. The new owners could opt to absorb your mortgage, which would allow them to continue making your fixed-rate payments rather than finding alternative financing.
We suggest that you publicize a VA loan assumption sale to entice more offers.
Not Suitable for a Time-Sensitive Situation
Your home may sell quickly, or it may take days, weeks, or even months, depending on the local property market. An experienced real estate agent can accelerate the process, but you will have to pay a commission on the transaction. Nevertheless, there is no guarantee that your house will sell when you really need it.
Renting Out the House
Variable Home Values
If the value of your residence has dropped lately, think about renting it out. You might be able to cover your mortgage repayments with the regular rental income - and maybe even have some money left over!
Increase Your BAH Usage (Basic Allowance for Housing)
Revenue from a renter and BAH are the ideal combination for quickly paying off a mortgage. There is no reason why you shouldn't increase your payment amount and return home economically better than before, provided that the property wasn't funded with a VA loan.
Stressful Property Management
You most likely will be unable to oversee a rental property when you're deployed. The procedure can seem like a full-time job with finding a renter, collecting rent on a monthly basis, and taking care of repairs.
The cost of using a professional property management company can range between 50 and 150 percent of the initial month's rent. Before deciding to go this route, determine all of your expenses first to ensure you have the money necessary for this.
Why Renting Your Home When You Deploy Is the Better Option
Your house is perhaps your most valuable possession. When you are deployed, you may have the chance to let your tenants pay off your mortgage until you return at a later time, or you may decide to take advantage of the market's growth and reinvest the proceeds elsewhere.
The largest challenge for an owner who wishes to maintain their residence while they are away is deciding how they’ll rent the property. Being a landlord and a soldier at the same time is incredibly difficult. Here, we have some tips for landlords on how you can make this job simpler:
Maintaining Contact With Tenants
Ensure tenants know how to reach you or a competent authority in an emergency situation. Give potential renters your most recent contact information while you're abroad as well as emergency contact information.
Finding the Best Tenant
Once you've already been deployed, it will be tough to find a tenant. Thankfully, there are a number of options to fill the vacancy, such as asking reliable friends, family members, or other furloughed soldiers whether they know someone looking for a place to rent.
If you have questions concerning the tenant screening process and are unsure who to ask, get in touch with a property management company for assistance.
Always run a credit and background check on potential tenants and ensure you have authorization before doing so. Make sure your tenant is reliable, has good communication, and has great references.
Recognize Your Statutory Rights and Duties
You should never rent your property without a written rental contract. By doing so, you'd expose yourself to potential financial and legal consequences. The following topics should be covered in your lease:
- The term of the leasing contract
- The size of the security deposit and any accompanying terms
- Date for paying the rent and any penalties
- Tenant obligations, such as upkeep of the area, gadgets, and adherence to property regulations
- Conditions of eviction
In any case, have a seasoned real estate expert evaluate the agreement to make sure you've covered all the essential points. You will also need to find out what your state's laws are about landlord and tenant responsibilities.
Hire a Property Management Company
Consider working with a trustworthy property manager like RentEasy. Our property managers are industry experts with the knowledge and skills needed to manage your property's daily operations. We will also handle any emergencies your renter may have and take care of repairs, maintenance, and accounting.
Stand-alone homes, multi-family residences, and apartments are just a few of the many different types of property that RentEasy specializes in handling.
You can be sure we are more than capable of taking proper care of your home and its tenants.
If your goal is to make an investment out of your rental property, we will ensure to not only take care of your home’s day-to-day needs but to increase its potential and grow your ROI.
Contact us if you're prepared to upgrade your property investment in Hampton Roads!