If you’re moving out of the home you’ve been living in or relocating out of state for work or other opportunities, you’ll have to decide what to do with your property. For some people, selling it is the only option. They might need the cash they’ll earn to put a down payment on a new house or meet other financial obligations. If you don’t absolutely need to sell the home, you might want to consider renting it out.
There are pros and cons to selling or renting your investment property, and your decision will depend on what your plans for the future might be.
Evaluate the Sales and Rental Markets
The first thing to look at is whether the sales market is strong enough to earn you the sales price you’d ask for your home. If it’s a strong market, and you think you’d earn a profit that makes sense for your property, you may want to consider selling.
However, if you don’t have a lot of equity built up or you wouldn’t be able to get the price you want or it would take a long time to sell, you might want to rent it out while you wait for your value to appreciate and your equity to build. If you hold onto the property and collect rent to pay down your mortgage and cover your expenses, the sales market could be strong enough in three or five years that you can comfortably sell the property.
Consider Your Financial Position
If you need cash and your home sale can provide it, you should sell. Renting out a home can provide income and net you larger returns in the long term, but you won’t see an instant influx of cash by renting your property. You’ll also need to have some cash in reserves for things like maintenance issues, unexpected repairs, and vacancy periods where your property isn’t earning any rent. You don’t want to rent out a property if you’re strapped for cash because repairs absolutely must be made immediately.
You’ll also need to invest some money in marketing, landscaping, and the cost to screen tenants. You can always sell a house “as is,” but on the rental market, there are habitability standards that must be met and landlord/tenant laws with which you must comply.
Plans for the Property
If there’s a chance that you might return to the area, don’t sell your house. Maybe you’re relocating for work and you plan to come back in a few years. Or, you could plan to be away for longer but you know the house you currently own would make an ideal home to retire to. These are good reasons to rent it out instead of selling it.
Talk to Professional Real Estate Experts
This decision will best be made with the help of experienced real estate agents and property managers. We can evaluate the market and let you know what you could earn if you sold your home or decided to rent it out. We can also talk about the tenant pool, how long it would take to find a well-qualified renter, and how to get the property ready for either the sales or the rental market.
If you do decide to rent out the home, we strongly recommend you work with a professional property management company. This is especially critical if you’re moving out of state. Not only do you need a local presence, you also need to have a buffer zone between you and your property. It’s easy to get emotionally involved when it’s your home.
We’d be happy to talk further about your options. Please contact us at Fickling & Company Property Management.