B49 - Renting out Your Home
You might have heard about people renting out their home for someone else to live in.
There are several reasons why this option is worth considering. This might be a way of generating a cash flow to help with the cost of living.
Or you might need to move to be closer to services or because your home has become unsuitable for you. You may prefer to live with family or whānau or have a hankering to try out
a new environment. Perhaps you have a new partner who already has a home where you both can live. For some people, it makes sense to rent out their home and postpone selling it until
the time is right for them.
- You can get a regular income from the rental payments.
- You can find a home that is more suitable for you and closer to the services you need.
- You can gain from the companionship and support from living with others.
- If you expect to sell eventually, you can choose a time when the market is favourable and you are emotionally ready to detach yourself from your old home.
- There are obligations and responsibilities associated with being a landlord.
- There are expenses associated with operating a rental, such as repairs and maintenance and insurance, and if you use a property manager, management fees.
- There are risks associated with having tenants, including difficulties in keeping the property tenanted, late payments of rent and property damage.
- The rental income may affect any government support payments you receive.
- You will have to pay tax on any profit from rental income.
- Consider how you would feel about
other people living in your old home.
- It's important that the move makes financial sense for you. You will have expenses associated with being a landlord, as well as rates and perhaps a mortgage to cover. You will
also have to meet living expenses in your new home. All these expenses have to be offset against the income you can earn from renting out your home. For the idea to work, you need
to come out ahead financially.
- Find out what rent you could charge.
What do I need in order to take this option?
- You need to take the time to thoroughly investigate the benefits, pitfalls and requirements of the option.
- You need to be able to manage the rental yourself or to hire a company to do that for you.
- You need to have an alternative accommodation arranged for yourself to move to.
Could this option limit my future choices?
Renting out your home will give you choices in the future: you could go back to live in it or sell it.
For more information