“Should I put my condo at Harbourside up for rent or not?“
Many owners are thinking about this question at some point during their ownership, and there are many pro’s and con’s to consider. The rental income can off-set some expenses, however, it is tricky to judge if a rental at Harbourside will be a money-maker or not.The simple math:
Amount of total annual rental income
– Annual dues for the condo association fee
– Annual real estate tax
– Annual insurance premium
= Owner’s income BEFORE cost of money and repairs.
If there is a mortgage on the property, deduct your mortgage payment. But even if there is no mortgage, the money tied up in the condo could be invested somewhere else, and yield a nice return on investment. So the lost profit on that money somewhere else is indeed a cost to consider.
$16,800.-/year Rental Income (let’s run an example with $1,400/month rental price)
– $5,028.-/year Association Dues (for example $419/month for a 2br/2ba unit at the Beachwalker)
– $3,500.- Property Taxes (assumed for my example)
– $500.- Insurance premium (seems to be going rate)
=$7,772.-/annual or $647.66/month income BEFORE COST OF MONEY AND REPAIRS! Many people end up with a big “MINUS” in front of their bottom line after they deduct their mortgage payment.
There are other factors to consider, that have a less obvious financial impact. If owners don’t use their condo much, and were to rent it out under an annual lease instead, they would save the entire expense for the electric, since annual Tenants typically are responsible for their own power bill. On the other hand, there will be wear and tear on the appliances, and accordingly repairs, which wouldn’t occur otherwise.
But a big benefit to some people are tax write-offs. If on paper your Harbourside rental is producing a loss, it might actually still be advantageous to rent the condo out. Initially, many people do not think about the tax impact, but I recommend for clients to consult with their Tax Accountant, who can calculate the overall financial impact for them. Very often that conversation helps to make an educated decision. Some owners decide renting is right for them, others realize they rather sell their condo, and others are contend with using it occasionally themselves.
If you have any questions about renting your condo out, contact me at 727-480-4155 or via ReachTanja@gmail.com. I am happy to discuss your concerns and share my knowledge and ideas!