How to Know Whether to Rent or Sell Your Investment Home
Because the real estate market is hot, buying investment homes and flipping them is a great way to make some extra money. However, it is sometimes difficult to know whether you should sell or rent your property. Selling provides you with a larger amount of cash upfront, but renting out the property may give you more money in the long run. Being a landlord comes with more work, however. If you are considering renting out your property, there are three things you think about.
The state of the housing market has a direct impact on whether you should buy or sell your investment property. According to one study, 35% of Americans rent their home. This statistic shows that there is always a market for people to rent properties. However, you may not recoup your investment money if you've tried to sell when the housing market is slow.
You should study the housing market thoroughly to determine if now is the right time to sell. If you can't fetch the price you deserve for the house, you may want to consider renting it until the market rebounds. Remember that you may need to make significant renovations to get the house ready to put on the market if you do decide to sell. Renting is the better long-term investment because it guarantees you a steady flow of money each month. The amount of cash you make from the rent should be enough to cover the cost of the mortgage and expenses plus at least 10%.
The Duties of a Landlord
Landlords have a lot of duties. Not only will you be responsible for collecting the rent check each month, but you must also respond quickly whenever your tenants have a problem with the house. You will be responsible for replacing malfunctioning appliances and making repairs as the house ages.
Managing a rental property takes up a significant amount of time. If you don't want to dedicate all of your time and energy to managing the property, you can choose to either sell it or hire people to help. Hiring a lawn service is a good way to keep the lawn well maintained. You can also pay a property manager to oversee repairs and the collection of rent checks each month. You will have to pay for these services, but the amount of time they save you may be well worth the money.
The Expenses
If you decide to sell the property, you will need to include closing costs in your final determination of price. However, this is a one-time fee that still allows you to make a significant amount of money. Deciding to rent out a property makes you responsible for additional expenses. Whenever anything goes wrong on the property, you will be financially responsible for fixing it so that your tenants are comfortable. Sometimes, these expenses are easily covered by the amount of rent you receive each month. They can also be significantly more when there is a major issue with the house.
You’ll also need to spend a little money to showcase and market your property. Shooting a video to feature on social media or your website, for example, is a great way to give people an idea of what your house has to offer. If you don’t have the money to hire a professional videographer, you can put together a video yourself with relative ease. Use your phone to shoot your footage, then find online tools and apps that can help you quickly combine videos. All you have to do is drag and drop the files and the software handles the rest. Afterward, you can then edit into slick, shareable content for your marketing push.
If you have invested in and renovated a fixer-upper, you have the option to rent or sell it to recoup your money. Both are good options in various situations, so it is important to understand these three things about renting to decide which choice is best for you.
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