The year is 2025, and the New Orleans real estate market is… questionable, at best. It’s a buyer’s market. And buyers are being INSANE. Even though it’s a buyer’s market, sellers are being equally cuckoo for Cocoa Puffs.
But, we get it. You likely need to sell your home or, at a minimum, start getting that monthly mortgage amount covered by a tenant. Many people who bought homes between 2020 and early 2022 find themselves in a position where their home isn’t worth any more than what they paid for it. (Also… some think their home should just appreciate in value for no reason beyond the fact they have owned it… I digress.)
So, whatcha gonna do? Sell the house, potentially at a loss, or rent it out? There are some things ot consider if you’ve hit the mindset of “I’ll just rent my house instead.”
#1: Homeowner’s Insurance
Before putting up that for rent sign, have you talked to your insurance agent about how your rates will change when you no longer occupy the home and have tenants instead? Give them a ring and make sure the costs make sense.
#2: Property Taxes
When you no longer live in this house as your primary residence, you will lose homestead exemption. Homestead exemption allows you to have lower property taxes for living in the home full-time. When you lose homestead exemption, your property taxes will increase. How much? Check with your assessor’s office to find out.
#3: Should YOU be a landlord?
Not everyone should be a landlord. Will you be able to handle tenants making outlandish requests? What if your tenant stops paying rent? Can you afford to pay the mortgage on this property while going through an eviction process?
There are also vacancies between tenants to consider. Will you be able to afford this home if you go a couple of months without any rent? There are many variables when considering if you should be a landlord or not.
#4: The rent may not cover the mortgage amount
This is a common issue we are seeing with many of our clients who want to rent out their home. The monthly mortgage amount exceeds the rent you can get.
Why is this happening? The rental market has softened, and there are options for tenants. They aren’t forced to pay exorbitant amounts any longer. Tenants have options right now.
One of the main things we remind homeowners who want to rent their property is to make sure they have factored in the rising costs of property taxes (and potentially insurance) when changing your house to a rental. Is the math mathing? Are you going to lose money? There are many things to consider when saying, “I’ll just rent my house instead of selling.” Make sure it all makes sense for you!
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Things to Consider Before Becoming a Landlord
Contact Team Be New Orleans