There are several important criteria to consider when it comes to renting or selling your house: Will current market conditions hold? What are the expenses for the property? What is the long-term outlook for the neighborhood? Can I increase my property value?
Before you decide on renting vs. selling, check out some of the factors you should take into account in the infographic below:
Should you rent or sell?
Wondering what to consider? Read on:
Renting or selling is as much a personal commitment as it is financial. If you need an immeiate profit in order to purchase a new home, you may want to sell your home unless you would be using the income from the rent to offset your new mortgage.
Think to yourself. Do you have the time to assume landlord duties? Are you available to handle emergency calls? If not, do you have the capital to hire a property management company? And finally, will you be able to pay the mortgage if your tenant cannot cover the agreed upon rent? These are all important factors to consider before making the decision to rent or move.
Analyze cash flow
When breaking down your housing cash flow, separate costs into two main categories: monthly expenses and emergency maintenance. Monthly expenses will include mortgage payments, taxes, insurance, and miscellaneous fees. Calculate your actual monthly expenses for the property to ensure that the rent price you set allows the property to support itself.
Emergency maintenance funds require you to build up a reserve for when sudden repairs or improvements are needed.
Evaluate the market
Consider these five points to determine whether or not the market is favorable to your decision to rent or to move.
- Rental demand – check to see if there is a need for rental properties in your market. It’s likely a better decision to rent a place in the city or near a college campus where the population is constantly changing rather than try to rent out a house in a suburb of single family homes.
- Competitive price – Find comparable dwellings in your area to determine if they price you are asking (for sale or to rent) is within the market range.
- Timing – plan to sell in the spring or summer when sale prices trend higher.
- Condition – Get your home in prime condition to fetch a good price based on the market.
- Immediate vs. long-term income – Consider if it’s better to sell now for an immediate profit or rent for long-term income.
Pros and cons of renting and selling
The pros of renting include a steady stream of additional income and potential tax breaks. You may also benefit from property appreciation during the time you defer the house (if you do plan to sell eventually). Cons? Time and tenants. Managing multiple properties takes time and capital, which can make it too difficult or involved for some people. Also, disrespectful tenants don’t have the same stake in the property as you. If they don’t care for your place carefully, tenants can cause damage to the property beyond your ability to recover the losses.
The pros of selling include immediate capital that can be used to a new home or property, and possible tax incentives. Plus, if you time it right, you only need to manage one property at a time. Cons include the potential for loss on the property due to current market conditions. Also, the condition some properties are in can make it harder to sell the home than to rent it.
Whatever you choose, visit Nationwide.com to learn more about protecting your property.