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I'm single and live in a 2200 sq ft house where my monthly payment with everything included is $1,200 a month, and it would rent for at least $2,200 a month but probably more. I was thinking of renting it out and using the extra $1,000 to rent a studio apartment. Seems like a great idea for basically free rent, but that only accounts for a profit of $12,000 a year which is about 10% of my take home salary. So it really don't seem like much when I think about it that way. What are your thoughts?
Many tenants are hard on a house, so if you rent your house out expect damage and a lot of wear and tear.
It might be a good plan if you can't make the mortgage and are afraid of losing the house, although, if you can't make the mortgage payments, the best option is to sell it quick,
The rental forum on CD has lots of post about the joys and perils of being a landlord. Although you will be hit with lots of negative aspects of being a landlord on that forum, at least they are honest enough and not sugar coating the reality of renting out your home. You may never experience any adverse issues, but, at least you knew what to expect.
I'm single and live in a 2200 sq ft house where my monthly payment with everything included is $1,200 a month, and it would rent for at least $2,200 a month but probably more. I was thinking of renting it out and using the extra $1,000 to rent a studio apartment. Seems like a great idea for basically free rent, but that only accounts for a profit of $12,000 a year which is about 10% of my take home salary. So it really don't seem like much when I think about it that way. What are your thoughts?
Don't know much about you, so I'll have to answer from my perspective.
Would be a good idea for me, but I'd do things a little differently. I have owned my home for over 20 years and there is no mortgage, so I would sell it outright.
The proceeds from the sale would be tax free for me, so the money would go into T Bills, where it will pay 5.25%. T Bills can be purchased monthly, so I would get what amounts to dividend checks every month.
I'm retired, so I would plan to never buy another home. The money from the sale will depreciate in value, of course, but that's not much of a concern for me. If I needed more than what I was getting in dividends, I would not hesitate to use some of the principle; it would last me the rest of my life, no matter what I do.
I lived in a studio apartment once, some 40 years ago, and I just loved it. In fact, we own some town homes and I would convert one of them into sort of a studio and move in if something happened to my wife.
We have been landlords for years. My advice to you, if you decide to rent your home, would be to use an agency and distance yourself from the day-to-day problems.
I'm single and live in a 2200 sq ft house where my monthly payment with everything included is $1,200 a month, and it would rent for at least $2,200 a month but probably more. I was thinking of renting it out and using the extra $1,000 to rent a studio apartment. Seems like a great idea for basically free rent, but that only accounts for a profit of $12,000 a year which is about 10% of my take home salary. So it really don't seem like much when I think about it that way. What are your thoughts?
No, it accounts for a cash flow of $12,000. That's not the same thing as profit.
If you rent the house for $2,200/mo, and have a mortgage of $1,200/mo, then you have a net gain of $1,000/mo. How much is the studio apartment going to cost you? Let's say, $800/mo. That leaves you with a resulting gain of $400/mo.
From that, you have to still have to pay for maintenance. Renters are going to be harder on your property than you were, so you'll need to set aside more funds than you think. You'll also need to insure the home as income property, which is more expensive than homeowner's insurance.
You also need to factor in vacancies. If it takes you more than a month to find a tenant, or between tenants, then you lose $2,200 for each month.
You will need to continue to pay property taxes and you will need to pay income tax on your rental earnings as well.
Summary: I think you need to check your math again.
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