QUESTION: My husband and I have been back and forth about buying a house for the last few months and can't seem to decide! We just saw a house that was listed in The Welcome Home magazine and my husband seems very interested. We decided we would like to rent ours since we only owe a few years. What is your opinion about renting and how will that play into effect when applying for an additional home loan?
ANSWER: I think that renting is a great option! Were you thinking of hiring a property management company, or of being the landlords yourself? There are pros and cons to both sides. I have a few companies in town that I would recommend to manage the property for you. The industry standard is usually 10% of the monthly rent goes to the management company.
Another option, that is gaining popularity, is to rent your home to a house tender. Usually the rent is set at a rather reduced rate with the expectation from the tenants that the home will be kept in show quality. With furniture and decorations to accent the home. The tenants in these situations understand that they can be given a thirty day notice at any time - when the house goes under contract.
I guess it depends on if you were wanting to get into the rental property market, or if you were just nervous about the market. We should chat about this. As far as how it applies to your obtaining a second mortgage; rental income cannot be counted as income until you have been receiving rent for two years. I work with a number of mortgage companies here in town. I would be happy to have them give you a call to see if two mortgages is an option, or if it would be more financially prudent to sell your home first. There is no cost or obligation, just informational.
Let me know what you think. I'd also be happy to sit down with you and talk through it. I've set up a couple meetings in the past where I get buyers together with other industry experts so that any and all the questions you have can be answered. Let me know if that sounds like something that might be helpful.
