But then if I sell the house, I can bring the equity and reduce my mortgage payment which is at 5% for 5 year ARM, do you think it would still be beneficial from a financial perspective?Looking at it from a purely financial perspective, putting the the TH into service as a rental property will allow you to keep the amazing 3% interest rate and let you write off your insurance, property tax, interest, depreciation, management fees, etc against your rental income while your property keeps appreciating. Finally, every time you sell you take a hair cut from realtor fees and closing costs. Leaving the TH to your kids will also allow the home to get an instant step-up basis for tax efficiency if you keep it until you move on to the next world.
The downside of owning a rental is that at some point you might want to 1035 exchange it or take a pretty big unrecaptured depreciation tax hit the year you sell it outright (if you ever decide to sell it). Also it's another thing on your plate to handle if you don't have good management (this is so key). Risks involve tenant turn-overs, law suits, repairs, squatters, natural disasters, property tax hikes, insurability so on and so forth.
I do like the passive income rentals generate, and I've become friends with my tenants. One of my tenatns a single mom with 3 kids who has has been recovering from brain cancer for the last 8 years. Even though it's a huge hassle at times, I still like the personal aspect of it.
Statistics: Posted by siankisr — Thu Oct 10, 2024 11:02 pm — Replies 10 — Views 276