Looking to sell your current home and buy a new home? Before you decide to sell, consider whether renting out your house makes financial sense for you.
As you evaluate the pros and cons of selling versus renting, here are some tips to help you make a more informed decision.
Turning your home into investment property could be a good financial move for you for several reasons:
Do some quick calculations to estimate your monthly cash flow if you choose to rent out your house. Keep in mind that you may not generate a positive cash flow right away, but you may be able to achieve this through renovations, rent and capital appreciation
Before you make a decision about selling or renting out your house, consider the following questions:
Are you ready to be a landlord and take on all the responsibilities that come with owning a rental property? Managing tenants can be easy or require a lot of time and patience, but doing thorough tenant searches can help you avoid renting to less than ideal tenants. Your time could also be consumed with ongoing maintenance and repairs. If you don’t have the time or interest in managing the property, tenants and maintenance needs, consider hiring a professional property management company. It’s an added expense for you, but could be money well spent.
Every Canadian province has its own set of landlord-tenant laws. Rental leases, deposits, tenant rights and rules for eviction are likely to vary from one province to another. You may want to go online and research the specific laws for your location. You could also reach out to your real estate agent to see if they can put you in contact with a qualified legal expert.
To learn more, check out the Canada Mortgage and Housing Corporation site, https://www.cmhc-schl.gc.ca/en/co/reho/index.cfm, with a wealth of valuable information and resources for renters, landlords, etc.
You may want to contact a local real estate professional for help gathering and assessing relevant data for your property and the location, including expected growth, housing construction and property vacancy rates, and the fair market value of your home. Knowing that a property and neighbourhood is expected to appreciate in value in the short and/or long term is valuable information that will likely influence your decision.
If you choose to rent out your home, a real estate agent or property manager can help you screen potential renters, run background checks, set rental rates, etc. You may also want to engage an accountant or lawyer to prepare any legal and tax documents, draft tenant leases, assist with other administrative duties or paperwork, and provide advice and support as needed.
Speak with an investor mortgage specialist for help determining whether renting out your house is a good idea.
The content of this publication is provided for informational purposes only and is not intended to provide specific mortgage, financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard. Readers should consult their own professional advisors when planning to implement a strategy. This will ensure that individual circumstances have been considered properly and that action is taken on the latest available information.