With the real estate market finally coming back to some form of normalcy, many property owners are thinking about whether they should rent or sell their properties. This question relies on two very important factors… the numbers and how much work and time you want to put into renting. Here are a few questions every owner should ask themselves when deciding whether to rent the property or sell it.
Do I need to rent it out?
Depending on the market, it could be very possible that renting would be better than selling. Today the rental market is still in very good shape. There are plenty of prospects available for rentals.
If you know you are upside down on your property more than 20%, renting may be the option. Do the numbers….. get a management or real estate professional to run the rental comps for the property in question. If you are able to get more money in rent than you would in the sale, it maybe something to consider. Keep in mind that the goal is not to just obtain enough rent to pay the mortgage. Rental properties require upkeep, so try to make sure the rent can pay for the maintenance and repairs required.
What is the demand for rentals in the area of the property?
Some areas are truly hard to rent in. Several factors can play a role in that, like transportation, shopping, and schools. The best way to determine if your property is an ideal place for renters to pursue, is to have a real estate professional run an analysis of recent rentals in the area; how many, how frequent and how much?
Do I want to manage a property?
Managing a property can be a challenging job at times and definitely one that takes patience and knowledge of the laws required for tenants and owners. There are several federal and state laws that are required to rent out your property as well as tax laws that owners have to abide by.
Another factor to keep in mind is that the property is no longer your home, it is now a business that you are operating on an ongoing basis. Tenants will have problems and complaints. The property will need repairs because things will breakdown. Every tenant will not treat your home as if it were their own, so you will have to learn to mentally depart yourself from the property and act as the manager.
Is my home rent-able?
We would all like to think that our houses are wonderful, but the reality is that some properties need a little work in order for them to become rent-able. In some states and/or counties or districts, rentals have to be registered and inspected with an approval from that local district or state. What this means is that although you may think the property is fine to live in, the state may not. Simple things like a crack in the sidewalk or a broken piece of siding, may need to be repaired before the property is allowed to be rented. If these inspections are not required, you may also need to keep in mind the condition of the property when it comes to paint colors, appliances, cleanliness, and updates. Just because you love the red walls of your dining room and the 1965 old frig your grandmother gave you, these may not be the taste a renter wants for themselves. Updates and repairs should be an added expense to consider.
Overall, the choice to rent or sell is something that needs to be strongly thought through. The best help is to contact a real estate professional or property management company like Scott Property Management and allow them to help you look at all the factors and options to consider.