Picture this: After the reading of your great uncle's will, you realize that you are now the new owner of a rental property. You're overwhelmed at the thought of taking on such a huge responsibility.
Do you sell it to the highest bidder or do you continue renting to your uncle's tenants? When you start looking at your options, you realize that it's not a good time to sell the home due to economic uncertainty.
Thankfully, there are several benefits for accidental landlords to take advantage of when renting a property instead of selling it. Keep reading to learn more.
Rentals Can Increase Positive Cash Flow
Think of the inherited property as an investment property. The money that you invest into your rental property will be returned to you each month when your tenant pays their rent. If you stay on top of your landlord duties, you will notice that the amount that you charge in rent is worth more than the money that you actually put into it.
You can even hire a property management company for a percentage of what you make to handle the day-to-day running of the rental property. We can also help you find qualified tenants for the rental. Our property management services can help to make renting the property even more of a passive income for you.
Tax Deductions Can Help You Save Money
Having a passive income as a landlord, your rental property will generally have lower tax rates. Why? This isn't an "earned income" that you have to work in the traditional sense for. As a result, the income isn't subject to federal payroll taxes, such as Social Security and FICA.
As a landlord, you can write off property maintenance repairs, rental insurance, property taxes, and mortgage interest as deductions on your taxes. Becoming a landlord can help you to get a larger tax return every April.
Rent Checks Can Pay the Mortgage
If the rental property comes with a mortgage, you might be wondering how you can pay it in addition to your own home's mortgage if you don't sell it. You can use the rent check from your tenants to pay it.
You can also put your rent checks towards the cost of landlord insurance and property taxes for the rental property.
Home Value May Appreciate Over Time
Once you've owned the property for a few years, you may notice some home appreciation happening. This means that when you finally decide to sell the home a few years from now, it will most likely be worth more than it is right now. You stand to make more money out of it this way.
Answers for Accidental Landlords
Accidental landlords have a lot to consider when they inherit a rental property. They have to determine if they are going to sell it, live in it, or rent it out to another family. Thankfully, renting it out to prospective tenants can help simplify their lives rather than trying to find potential buyers in an uncertain real estate market.
Contact Renters Warehouse Hampton Roads today for more information about property maintenance and being a landlord in the current real estate market.