This is maybe more of a financial question. The buyers of my home made a cash offer for $286,000, and now they’re planning to rent it out for about $1,700 a month just two months later. The home was well maintained and upgraded, but it might need a new roof soon. I just can’t grasp how this is a smart financial move. Does it have something to do with taxes? What does the ROI look like on this decision?
It sounds like they’re banking on the rental income covering their mortgage if they financed it or just providing a steady cash flow. $1,700 a month translates to $20,400 a year, which is a decent return on a $286,000 investment, especially if they can write off expenses like depreciation and repairs.
Exactly! Plus, owning a rental property can provide tax advantages. They could write off property taxes, mortgage interest, and any repairs or upgrades they make. If the property appreciates over time, they stand to make a profit when they sell it later.
I guess it really depends on their long-term strategy. If they see potential for property appreciation or are looking for passive income, this could be a calculated move. Have you thought about asking them directly?
It’s also about the market. If rental demand is high in your area, they might think they can easily find tenants and keep the property occupied. That $1,700/month could cover their costs and then some, especially if they don’t have a mortgage.
But what about the roof issue? If they need to replace it soon, that could eat into their profits. They better have a solid plan for unexpected expenses.
Caelan said:
But what about the roof issue? If they need to replace it soon, that could eat into their profits. They better have a solid plan for unexpected expenses.
Good point! They should have a maintenance fund for those types of issues. It’s all about planning for the unexpected in real estate.