Some home owners are on the fence about selling their house and might not have considered renting their house instead. With the huge hike in rent prices and demand for rentals at an all time high, it might be wise move to rent your home instead of selling it.
Here are some of the benefits of renting instead of selling:
1) Protect the upside: If you sold your house today, you might not enjoy the upside if the prices continue to rise at their current torrid pace. Given the slow down on the pending sales most experts don’t anticipate double digits rise in home prices, specially with the rise of interest rates.
2) Downside Protection: If the market slows down dramatically then you can ride it out with your rental income assuming you have done enough planning to create a positive cash flow for yourself. One way to protect yourself is to add 3-5% annual rent increase to cushion the impact of a serious market down turns. And remember the Impact of a market down turn for your rental property will be on paper only.
3) Current Income: Renting your home will generate very good income for your Silicon Valley home. In fact, we have pre-qualified renters who are in dire need of good rentals in Los Gatos, Campbell, Saratoga and San Jose at this point. Our Single family homes in Los Gatos are fetching as high as $6,000 per month for rent.
4) Deductions: You will be able to deduct all the marketing and repair expenses that you might incur in getting your home ready to rent. In fact, you could hire a property manager to manage tenant screening, rent collection and repair supervision while deducting all the expenses. We recommend you consult your CPA if you need to know the exact impact of these expense on your taxes.
5) Huge Demand: Rental properties in Silicon Valley within good school districts are in huge demand. In fact, we are able to rent a 320 sqft detached Studio for a client that nets $1,100 per month. That’s absurd amount of rent for such a small space, but it shows the impact of demand for rental properties in towns like Los Gatos with great school district.
Finally, this strategy will allow someone else to pay your mortgage for you. So, call us if you are interested in renting your Los Gatos, Campbell, Saratogo or San Jose house.