What will you do with your home when you move? Should you sell it or place it on the rental market?
State and local governments have laws and regulations covering real estate, and there are other factors to consider.
Business Licenses, Permits, and Fees
Some governments require landlords have a business license. Others require a real estate license, still others only require a license to receive income from a business venture.
A Rental permit requiring an inspection from the local building and residence codes office is common.
Local utility companies may have rental property requirements such as an owner supplied security deposit in case tenants fail to pay their bills.
Check with your homeowners insurance company about changing coverage to a rental property. Also check on liability and structure insurance.
Active Landlord or Property Manager?
Will you hire a property manager or manage the rental yourself. If you decide to manage it yourself, you will need a plan in case you deployed or stationed overseas.
Maintenance and Repairs
Are you handy with tools and able to fix plumbing, plaster, and appliances? Can you paint walls, lay carpets, and replace broken windows, or will you have to pay someone else to fix things? Will you get enough rental income to build up savings to cover such expenses?
Do you have a plan to cover mortgage payments when you are without a tenants rental income. The Navy's Rental Partnership Program (RPP) can help you locate prequalified tenants. Check with your local housing office for RPP information.
You will be required to pay federal income taxes on your net income from the rental. In addition, your state and local government property taxes may be more or less if you are not living in the home.
The Good, the Bad, and the Ugly of Renting
If you plan to return to the area and move back into your home, or possibly sell it before you build or buy another home, the equity you will build by renting could be a good thing. It would be bad if your property spent more time being vacant than rented. And some of the problems you could have with tenants, lack of rent payments, bad checks, evictions, and destruction of your property — as well as many problems you could never even dream of — can get about as ugly as you can imagine.
Selling Your Home
OK, let's assume you've decided to sell and not deal with the good, bad, and ugly of renting. There could be a downside. Once again, every state, county, or even city has varying real estate laws. Be sure to look at the other articles here on LIFELines offering you guidelines and advice on selling your home.
Don't forget capital gains taxes. Get to know the real estate market in your area. If purchasing a new home is contingent on the sale of your current home, you need a backup plan if your home doesn't sell. Consider renting your home to protect your income while the house is on the market. A short-term rental will give you more time to make up your mind on these issues.
Real estate transactions are the most important financial decisions you will make. Stay informed to make a well-thought-out decision. Read about your real estate market and be sure you understand both the renting and selling options. If you follow this advice you will be happy with your decision a year from now.