Once you find a home in Irvine, CA, you may be thinking about whether you should live in it or rent it to someone else. If you own a property that you don’t reside in, it can be tempting to rent it out for a little extra money. Though this may seem like a good idea, first-time landlords are often surprised at the amount of time and money taken up by renting their properties out. It is important to have a good idea of what you are getting into before you take this step. There are definitely some significant issues with renting a property out, but it can also be very beneficial.
Con: You May Lose Money If the Market Is Bad
A lot of first-time landlords do not consider the fact that it may take a while to find a renter. While you are researching potential renters and waiting to sign paperwork, you will still have to pay the mortgage, property taxes, and other expenses on the place. This can lead to burdensome costs without the income of a monthly rent.
Pro: Renting Can Be a Useful Income Source
It might seem obvious, but the importance of rental income cannot be overstated. Those who rent in a high-value area can easily make enough to cover the mortgage on a property and turn a profit. Renting out extra properties can become a valuable source of profit if you are prepared to face the cons of renting.
Con: Renting Can Be Inconvenient
As a landlord, you will be responsible for repairs, maintenance, and collecting rental fees. If you have a tenant who damages the property or refuses to pay rent, you might even end up having to face annoying court battles. Even if you hire someone else to manage the rental property, expect to spend some of your time managing rental hassles.
Pro: Your Taxes May Be Smaller
There are currently many tax incentives for homeowners who rent their properties to others. In addition to normal deductions like mortgage interest, landlords also get to deduct maintenance, repairs, utilities, and even travel expenses to and from the rental property.
Con: Owning a Rental May Affect Your Credit
If the property is mortgaged, it will still appear as a current liability whenever your credit score is checked. Those who are particularly worried about their credit score may be able to boost their score by selling a property instead of renting it out.
Pro: You Can Wait for the Best Time to Sell
If you have an empty property during a down period in the housing market, you could lose thousands of dollars by selling immediately. Renting can be a good way to cover your mortgage while your property’s value recovers from a downturn, and you might end up with a big profit if property values in your area suddenly climb.
If you’re thinking about buying a condo in Irvine to rent out, or if you’d prefer purchasing a single-family home, trusted local real estate agents can help you find what you’re looking for. Call 714-454-6304 today to start your search.