When you hear about rental income, you are likely thinking about purchasing an investment property. What most people don’t consider is how rental income can benefit you as a homeowner and assist in getting you the house you really want to buy.
When it comes to getting the home of your dreams or moving into a different price bracket, having a tenant is one of the best ways to assist you with that. Every $500 in rental income can facilitate the monthly expense on a $100,000 mortgage. Most first-time buyers or move up buyers are in an interesting situation. They are able to afford a good home, but are just shy of being able to afford their ideal home that they can see themselves living in for the next 10 to 20 years.
While it doesn’t really benefit the growth of my business, I like to see people living in their homes for at least the next 10 years. The cost and time involved in selling and purchasing a new home is not a small figure. Having rental income can be the difference between you outgrowing your home in the next 2-3 years or being able to plant roots and build your life in a community you love.
Having the additional income generated from a tenant can often allow you to purchase a home for more than you could on your own. This is because most banks use part (or all) of the revenue generated from your rental unit towards your overall income. Doing that brings down both the total debt service and gross debt-service ratio that banks use to establish how much money they are going to lend you.
The best part about getting rental income from your home is that it does not have to be a definite thing. You can have a renter for as long or as little as you like, depending on your circumstances. People will often have a renter until they get a raise/bonus at work, to facilitate having one spouse stay at home, or they have a renter because they like having more disposable income!
Whatever the reason is, keep an open mind to having rental income if it means you getting the house that you would like to purchase now.
There are several factors that will come into consideration: such as zoning requirements in your city, finding the right renter and understanding the rules for landlords and tenants. All of which we would be happy to guide you through!
If you have any questions or would like to see if this is a possibility for you, please fill out our contact form below or give us a call to arrange a meeting.