4 Tips For Military Families Considering Renting Out Their Homes
Posted on: 18 September 2017
For most military families, having to move on a regular basis is simply part of their service to the country. But, if you're a homeowner, it can be hard to know what to do with a house during a difficult market.
If selling right now is either not an option or not what you really want to do, here are a few tips for the sudden landlord:
Know the Tax Implications. Leaving your primary home and turning it into a rental house has some tax consequences. First and foremost, you should be aware of the capital gains rules. Generally, this means that if you have not used your house as a primary residence for two years, you may have to pay taxes on the profit (selling price minus the amount you paid for it, plus improvements). If you're undecided about renting it out, you can use this as a grace period as long as you don't buy another home in the meantime.
Hire a Property Manager. Being a long distance landlord is hard enough, but a military family is often busy--sometimes working two jobs as it is--and may not have the time to devote to things like tenant screening, collecting rent, or maintenance of the property. You also cannot generally be there to handle emergencies and bigger issues. For this reason, it's a good idea to spend a little of your money hiring a property manager to do these day-to-day things for you.
Use a Lease. Even if you're renting to friends, coworkers, or family, be sure to have a proper contract drawn up and signed. Not only does this protect you, it also helps the tenant by making clear what your expectations and their rights are. For the best results, work with an attorney to write the original lease contract and make any large-scale changes to it.
Keep the Budget Loose. Owning a second home has many benefits, but it also comes with some added financial risk. For military families, it can be a golden opportunity to build wealth while allowing you to continue your career until normal retirement age. But, there are likely to be times when you don't have a paying tenant, legal disputes, and normal emergencies. To weather these routine--but unforeseeable--downtimes, it's vital not to stretch your budget too far.
Becoming an "accidental landlord" can be challenging, but it can combine with the good benefits from a military career to form an excellent base for a stable future. By following these few suggestions, you'll be sure to face this new adventure with more confidence and financial stability.
Contact a company like National Property Management Group for more information and assistance.
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