Renting the House – One Year Checkup

When we first started planning the trip, we decided that we wanted to rent out the house we own in Denver, CO. We didn’t want to deal with selling right away and the knowledge that we could always move back in after a year in case we hated the mobile life was comforting. So we got a management company and let our manager handle most things with the house while we were on the road.

On our About page we mentioned that we would revisit things in a year to see whether we wanted to sell, move back in, or keep renting. Well, it’s been a year and we certainly aren’t moving back in, (we love the mobile life too much!) so then lets look at if we should sell or keep renting.

We finished filling out our 2016 taxes recently and I got to run the math on whether or not renting the house worked out for us financially for the first 6 months. We knew that this year of renting was really expensive for us because of a couple events. We had a tenant issue and needed to pay two leasing fees to the manager, we had an issue with the sprinkler system, and we had a hailstorm destroy our roof (insurance fortunately covered almost all of it). We also had a lot of things we needed to change to get the house ready to rent out including $600 for an exterior door replacement, $400 for a new electric heater for the back room, $350 in landscaping and tree removal, and $250 for a plumber to fix a leaky dishwasher.


So with all of those expenses, here is what the numbers looked like for the six months of the year we had the house rented:

Received in rent*: $12,815

Tax savings: $1,455

Insurance*: -1,190

Taxes*: -696

Mortgage Interest*: -3,214

Management fees*: -2,550

Other Expenses (blah 😦 ): -5,302

Total Income: $14,270

Total Expenses: -12,952

Net Profit: $1,318

*Note: These categories only account for 6 months of these expenses and will double if we rent for an entire calendar year.

So all of those expenses and we still ended up making money on it?!?! Ok, cool 🙂 And that is without including appreciation on the house, which has been pretty significant because Denver has been going crazy for the past few years.

2017 should be much better financially because we’ll have twelve full months of rent, and all of those expenses we listed above have been handled. I’m sure we’ll have others (we’ve already needed to fix a leaky faucet) but hopefully it won’t be anywhere near the more than $5,000 of expenses we had this year.

If you’re big into real estate or if you’ve ever been to, you’ll certainly point out that we don’t meet the 2% rule (or even the 1% rule). But, we get some nice tax benefits from having the rental and the extra expenses will hopefully drop in the following year. It almost cash-flows and it certainly is still appreciating (we made as much in appreciation this year as we did in rent). I really hate speculating like that but it is what it is for the moment.

So long story short, we’re going to rent our house again for 2017 and we’ll re-evaluate again next year 🙂

Do you have experience renting your house after going full time? Was it worth it?

2 thoughts on “Renting the House – One Year Checkup

  1. Be sure to look at the IRS rules for depreciation on a rental. Some years ago it was changed so that the total basis went to Zero in seven years. If you are getting a great deal of appreciation and have a declining basis, you may be stuck with a huge income tax bill if you ever do sell the home. One of my friends divested himself of all his rentals because of the depreciation rules.


    1. is the source I used. Two things make our basis decline relatively slowly. First, our house counts as “Residential Rental Property” which gets depreciated over 27.5 years instead of 7. Second, only the building is depreciable and the land our house is built on is worth more than the building. Even despite the declining basis of the house, my understanding is that it won’t get counted as income tax but as capital gains tax when we sell and we can either 1) sell when we have lived in it for 2 of the past 5 years to qualify for the “primary residence exclusion”, 2) keep our income low enough in the year we do sell that we fall into the 0% tax bracket for long term capital gains ($75,300 + deductions + exemptions = ~ $95k/year) or 3) pay the tax.

      Definitely my first year doing this though so please let me know if you think I’m missing anything.


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