Thinking about selling a residential property in Greensboro? Think again. There may be more value to holding onto it and renting your property in Greensboro than you realize. It's worth evaluating such potential benefits as rental income, tax deductions, and property appreciation before you put out the “For Sale" sign.
Rental Income Cash Flow
Ideally, you want a Greensboro rental to produce a positive annual cash flow. Here's how to determine the likelihood of achieving that.
Determine the likely rent you'll receive. To figure out whether this is possible, start by determining how much your property would rent for. Check local listings for properties of a similar size and quality to yours, ideally within the same neighborhood. You may need to call some landlords or visit rentals for details. Birch Management can also help you to determine this amount.
Factor in "vacancy" time. Don't count on receiving rental income for 12 months of every year. Even if your Greensboro property is in high demand, transition time between tenants can take a month or two. The vacancy rate runs around 10%, but this varies widely between urban and rural rentals, and even by neighborhood or type of house. Ask Birch Management about your area's vacancy rates.
Subtract property expenses. Your rental income will not be pure profit. Factor in your projected property taxes, mortgage payments, insurance, utilities, repair and maintenance costs, and if you don't wish to spend your own time dealing with tenants, property management fees. Birch Management offers very competitive fees.
Maintenance costs can be particularly high if your house is old or you've put off major repairs such as replacing the roof or furnace. As a landlord, you'll be responsible for keeping the property in habitable condition.
Calculate your projected profit. To get your projected profit, subtract expected vacancies and likely expenses from the annual projected rent. If it looks like you'll come out $1,200 to $2,400 ahead each year, you're doing well by industry standards. If you'll only be breaking even, or will lose money by renting, it may still be worth it if you're likely to earn higher profits by waiting to sell.
Here are some of the more significant tax deductions available to small residential landlords.
Interest. Often a landlord's biggest deduction, this includes mortgage interest payments on loans to buy or improve rental property. It also includes interest on credit cards for goods or services related to the rental activity.
Depreciation. You can deduct the value of your rental house, but not the land, over a number of years.
Repairs. The cost of repairs to rental property such as repainting, fixing leaks, plastering, fixing broken windows is fully deductible in the year in which you pay for them.
Local and long distance travel. Landlords can deduct travel expenses related to their rental activity. The IRS scrutinizes these deductions, however, so learn the rules and keep good records.
Birch Management can help you go over all the benefits to renting your property in Greensboro. We can help you with all taxes, fees, and more. Give us a call today for more information.