If your present home no longer suits your lifestyle, selling out and relocating is a popular option. However, in many cases converting the home into a rental property makes a lot more sense. You may wish to sell your home or convert it to rental investment property for a diverse array of reasons.
- As a young couple, you are ready to upgrade from a condo or starter home to a more substantial property that will accommodate your growing family.
- If the children are grown and moved away from home, you may be considering selling to downsize to a smaller residence.
- If you are a recently widowed, you may want to sell because the home is too much for you to live in and care for now that you are living alone. You are unsure of future plans, but aware that grief experts advise not to sell your home for at least a year after a life-altering event such as divorce or the death of a spouse. Renting the property gives you time to adjust and postpones what could be a bad decision.
- You are considering an employment opportunity in another city and need to relocate your primary residence. If the new job does not live up to expectations, you will regret selling your property because you may want to move back home.
- The real estate market is fluctuating, and you are uncertain if you could sell now at the best possible price. Renting the property allows you to wait to put the property up for sale until the market is strong.
- You may wish to access the equity in your home to finance your retirement. Talk to your tax advisor. Selling your home is a life-changing decision. You may think you need the equity from the sale of your home to facilitate the purchase of a new home. Instead, you may choose to leverage that equity while still retaining benefits of property ownership.
- You no longer like the neighborhood and feel ready for a change. Renting the property and leaving it in the care of a responsible property manager allows you to travel, explore new living options, or take time to gain a new perspective. You may decide that selling is not your best option. Renting the property allows you time to evaluate the market before you make that choice.
No matter your motivation for selling out or converting your property into a profitable rental, contact a reputable property manager. A property manager can help you compare the financial advantages of renting your property versus selling while helping you make the transition as effortlessly and seamlessly as possible.
Points To Ponder
Does Renting My Home Create A Positive Cash Flow?
Knowledgeable in the local rental marketplace, your property manager can help you determine if the property will provide a positive cash flow.
When considering renting your property, a property manager will answer all your questions and help you calculate these potential rental expenses.
- What is the average annual cost to maintain the property?
- How much is your mortgage payment including both principal and interest?
- How much do you pay each year in property taxes?
- If you live in a condo or gated community, how much are your homeowner association dues?
- Do appliances need upgrading? Do the carpets need to be replaced? Consider if repairs or renovations are required before listing the home for rent.
- What is the cost of landlord insurance to protect the property against tenant damage?
- How much does it cost to hire a reputable property manager?
If the property, when rented out and all associated expenses are deducted, does not make an acceptable profit, you may be better off selling.
If you are considering selling, determine how much you might profit should the property be sold today. Keep in mind, if the property is not your primary residence, capital gains taxes may apply: tax rates vary from 0 to 20 percent, dependent on your tax bracket. If after factoring in taxes, fees, real estate commissions, closing costs, and other sales expenses there is little left, it may be best to rent the property and hang on until market conditions improve.
If you have never owned rental property before, you likely fear to take on the responsibility of marketing the rental, qualifying prospective tenants, showing the rental, leasing, collecting rents, maintaining the property, and dealing with difficult tenant issues. It does not have to be this way. A rental property is an excellent investment that can be financially rewarding while providing several tax incentives.
Engaging the helpful services of a professional property management company provides you with all the benefits of property ownership without any of the work or aggravation. We are here to help! Give us a call today!