Should I Sell My Home or Rent it Out?
It is normal to grow out of a space as your life progresses, and you never know what it will throw at you next. If you are considering leaving your home, there are options to consider which may get you more money or add value to your life.
The question of whether you should completely sell your home or rent it out to future tenants is a big decision. Both options have positive and negative effects that must be carefully considered before making such a big decision. Expert property managers at Utopia Management in Los Angeles have lots of experience with many different properties and homeowner circumstances and offer some suggestions to consider before making a life-changing choice.
Things to Consider When Renting
Will Renting Be Profitable?
If you are thinking of renting out your home, you need to ask yourself if it will generate positive cash flow. Consider the costs of renting out the home entirely and then subtract the money that will be made from being a landlord over time. Some expenses to include in your calculation are the mortgage, insurance, repairs, taxes, and other miscellaneous costs. Having other people living in a home which they are not permanent residents can greatly impact the cost of maintenance.
What your rental income will be is going to take some serious calculations as well. There are an incredible number of variables that go into this, so getting a clear idea of what that looks like is crucial. Remember that in most big cities, rental prices are steadily going up, whereas in more rural areas the rental prices have plateaued. Aside from the money, your wellbeing is of highest importance.
Do You Want to Be A Landlord?
Becoming a landlord can be one of the most stressful things a person takes on. Remember that you have virtually no control over what your tenant decides to do in your home. This could be a positive experience, and you could get some outstanding people renting from you, or you may get tenants who completely disrespect your home and never pay on time.
Having decent tenants still carries the stress of being on call 24/7 and having to consistently keep up with the property’s maintenance. As a landlord you are ultimately in charge of the places upkeep because you own the home. This is a business you will be investing your time, money, and energy in, so it should not be taken lightly.
Will You Be Returning?
If you are moving away from the city you own a home in, either temporarily for a job or to travel, then renting can give you some peace of mind. Knowing you have a place to return to after being away is an attractive option for those who decide to rent their homes out. Of course, this would mean having someone local to check up on the property or be on call for emergencies. You can calculate their compensation into the income you will receive by monthly rent from tenants who are occupying your home.
If you are unsure where your life journey is taking you, then it can be in your best interest to hang onto that property in case you decide to move back. Renting gives you the benefit of still owning your property while considering potentially selling in the future. Our life can be an unpredictable journey. The choice to rent or sell can be more than just cash flow and financial gain.
Things to Consider When Selling
All Sales Are Final
Once your new home buyer signs at the dotted line, you are free from all responsibility tied to your home. If you want to avoid the stress of renting your home out, then selling is a better option. If you decide to remodel or increase curb appeal, the cost and energy required to prepare your home can still create a ton of headaches, but once it is all over you get your money and can completely move on.
If you are making a large move, maybe to a new state or across the coast, you are probably better off selling. The incredible burden of owning two homes in two different states can be overwhelming. Being hundreds of miles away from your second home when there is an emergency is stressful for everyone involved.
Getting Out of The Market
If the market value in your area is predicted to go down in the future, it would make the most sense to get out while you still can. Selling creates as much income as possible during the time of sale and can give you so much more revenue than renting it out, especially if the market is going to tank.
Remember that the market can never be perfectly predicted, and the possibility of being wrong about the future rings evident, however, if you are convicted the market will plummet, selling makes the most sense. The equity gained in a final sale can be reinvested and hopefully make even more profit for you in the future.
Having strangers come into your home while it is still under your care may be too much to handle. If you overthink all the things they could do to your home as a tenant, you will never be able to enjoy the real estate business. Selling your home would eliminate these variables altogether, and potentially give you more peace of mind than ever.
When selling, you receive the money from the buyer’s purchase, and will never have to worry about the unpredictability that comes with having tenants. Selling your home frees you from any burden a tenant could bring and puts the current owner responsible for what happens to the house. This way you can clean the slate before completely moving on to the next chapter of your life.