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February
17, 2010
Tips & Trends
From
Rory S. Coakley on some of the latest real estate news and
happenings.
Renting vs. Selling Your Home
Occasionally a house just doesn't sell. You may have done
everything correctly, but the market was simply unfavorable
for you at that time. There's no need to give up on the
property altogether, though. It might be worth your while
to consider renting out your home as opposed to trying to
sell it.
Rental properties create cash flow. A solid, positive cash
flow is determined to a great extent by the amount of the
rent that the property brings in. The monthly rent you charge
should ideally cover the property's mortgage payment and
any incidentals. If it doesn’t fully cover those expenses,
try to get it as close as you possibly can. Being on the
hook for $100 a month is a much better situation than having
to shell out the whole mortgage payment, even if you do
still have a negative cash flow situation.
Although you're a landlord, it's not absolutely necessary
that you handle every problem that comes up. As a matter
of fact, you sit back and get paid by your tenant without
having to deal with even one leaky toilet. Yes, you as a
landlord are generally responsible for all repairs on your
property, but you can hire a property management company
to actually take care of those tasks for you. The company
can also screen potential tenants, carry out repair orders
and collect the monthly rent. If your plans call for moving
to another state, having a management company is a great
option.
Rental property is considered to be a real estate investment.
Therefore, as an investor, a number of tax breaks become
available to you. For one, you can deduct money for wear
and tear of your home (also known as depreciation). Depreciation
is only a paper deduction, since homes actually tend to
go up in value over time – usually (witness the current
housing market woes). A landlord can also claim a depreciation
loss for appliances in the home. This can be done in one
lump sum or spread out over a number of years. Any depreciation
amount has the effect of lowering your taxable income. It's
even possible to claim enough deductions to show a net loss
on the property, even though you're receiving rental income
each month from your tenants.
Renting or leasing your home could be the beginning of a
whole new opportunity in real estate. As an investor, your
properties will work for you to make money. Furthermore,
you can use money that you made from one property to invest
in another, thereby deferring taxes on that profit. Renting
or leasing allows you to put off capital gains until the
time that you sell the property, if you should ever choose
to.
Source:
www.finweb.com
If
you would like to suggest a topic for comment in one of
our future emailers, please let me know. You can always
reach me at rory@coakleyrealty.com
or by phone (240)-205-7298 ext. 101. I look forward to hearing
from you!
Rory
S. Coakley
Coakley Realty, Inc.
20 Courthouse Square - Suite 106
Rockville, MD 20850
www.coakleyrealty.com
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