Should I Rent or Sell My Property?
Whether to sell or rent a property you own depends on many factors. First, you need to consider the current market. Is it a buyer’s or seller’s market? If it’s a buyer’s market, you may have to wait longer to find the right buyer and sell for less than you would like. If it’s a seller’s market, you may be able to sell quickly and for a reasonable price. It would help if you also thought about your circumstances. Do you need the money from the sale right away? Would you be better off renting the property and having a steady income from it? There are pros and cons to selling and leasing, and the final decision comes down to what makes the most financial sense for you.
Do you need the cash?
If you need the cash from selling your home, then it may make sense to do so. For example, you may need the money to buy a new home, pay for education, or invest in a business. However, if you do not need the money from the sale of your home, you may want to consider renting it instead.
Rental Price vs. Cost of Ownership
One thing to consider when deciding whether to sell or rent your property is the possible lease price vs. the cost of ownership. Usually, landlords lease their homes for 1% of the property’s value. Is that enough to cover the mortgage, maintenance, taxes, time and effort qualifying tenants, showings, and other landlord duties, HOA fees, and vacancies? Of course, hiring a Property Manager will alleviate some of the issues, but you still have to factor in their cost.
Do you want to build equity?
Renting a home you own can help you build equity in several ways. First, the rent payments you receive can go towards the mortgage principal, thus helping to reduce the overall amount you owe on the property. In addition, as the value of your home increases, your equity will also increase. Finally, if you make any property improvements that increase its value, this will also add to your equity. All these factors combine to help you build equity in your rental property more quickly than if you lived in it.
Do you want to be a landlord?
This is an important question to ask yourself? Do you have the time, knowledge, and attitude required to be a landlord? Tenant qualifying, property showings, and dealing with contractors and tenants during holidays or after hours are not for everyone. But, of course, you can always hire a Property Manager to perform those tasks. In most cases, a Property Manager can handle the same issues in a fraction of the time and with reduced costs.
Do you have liquidity problems?
Whether you run the rental yourself or with the help of a Property Manager, you must have an emergency fund. It could be a broken appliance, a leaky roof, or a sudden tenant departure that will keep your property vacant for a month or two. The same as with personal finances, it is wise to keep a three to six months emergency fund in case of eventualities.
So, should you rent or sell your property? The answer to this question largely depends on your circumstances. If you need the cash or dislike the idea of becoming a landlord, then selling may be the right choice for you. However, renting may be the better option if you want to build equity and like the idea of becoming a landlord. Ultimately, analyzing all the factors involved is essential to making an informed decision. It could also make your choices clearer talking to a professional with years of experience. Well, have you made a decision yet? Let me know in the comments!