Time to pack up and move on? It has been for many Americans in the past few years, with the COVID-19 pandemic changing the way in which we live and where we want to live it. On average, the typical person moves over ten times in their life, so it’s no surprise that another move might be on the horizon for you.
However, there is a big decision you have to make when you plan to move to another home. What will you do with the existing property? Do you rent out your home, or sell it?
The potential to bring in some income through your property can be tempting, but making a clean sale can also be a smart move. How do you decide which is right for you and your situation? Read on and we’ll walk you through a few things that can help you land on a final decision.
When to Consider Renting
When you first purchased your home, you likely weren’t thinking about its potential as a rental property (if you were, bonus points to you). Not all houses will be worth hanging onto as a rental home, but many will.
How can you decide? The main factor that you’ll want to look at is the price of the property. You’ll be facing a lot of costs if you choose to hold onto the property, including the mortgage, taxes, maintenance, and insurance.
You could still be held liable for injuries sustained at the property when your tenants move in, so getting additional landlord’s insurance can be essential.
You’ll need to be able to rent your home at a price that will not only allow you to cover all of these costs but make a worthwhile profit as well. Determining exactly what your home can rent for might be difficult, and you should look at similar homes within your local market to get a reference point.
Experienced rental professionals might also be able to take a look at your home and offer their opinion on what a reasonable asking price would be.
If the asking price for the home is far enough above the costs you’ll need to weather in order to keep it, it can certainly be worth putting it up for rent.
The amenities near your home will also contribute to how well it will do on the rental market. Are there great entertainment options, eateries, and bars nearby? Is it in an enviable neighborhood that many people want to visit or live close by to?
Are there great schools nearby, or is your home close to areas where one might work? These are all elements that can help to push your rental price upwards and make becoming a landlord seem more enticing.
Looking into Rental Laws
Let’s say you’ve looked into the local market and you’ve decided that renting makes a lot of sense for your property. You’ll be able to make a decent profit and it can be an additional source of income for you during the coming years.
What do you need to do next? Before you leap at the opportunity, you’ll need to get familiar with the legal situation in your area. Before you can rent the property out, you’ll need to ensure that the home is up to all safety and building codes.
In addition, there are local laws (and state and federal ones) that cover renting a residency. These laws surround a wide variety of elements of the landlord experience, from how a lease needs to be written to how one can communicate with their tenants.
You’ll want to make sure you understand these laws in and out before you start renting, and this can take time. It’s a lot of responsibility.
It’s for this reason that some homeowners bring on a property management professional to help manage their homes.
These professionals know the ins and outs of the law like the back of their hands and can ensure that you are always solid in the eyes of the law. Renting out real estate can take some knowledge of the law, but is well worth the trouble it takes to get familiar.
When Will It Make More Sense to Sell?
There are some situations where hanging onto your home as a rental won’t make the most logical sense. In these scenarios, it’ll be time to let the home go and take the money in from a sale instead.
The most obvious situation where this would be true is when you’re relying on the money from the home in order to purchase your next home. You don’t want to rely on the slow drip of rental income if you’re relying on the money to live.
If you live in a neighborhood where there are a lot of restrictions on rental homes, that might also stop you from pushing towards this extra income.
Some neighborhoods simply don’t want new people coming in and out and will restrict rental possibilities so much that it doesn’t make it a solid financial choice.
Depending on the current market, it also might make more time to sell. You’ll want to sell your home while the price of homes is up, after all. If it isn’t a seller’s market at the moment, you can rent a property until it is.
Rent Out Your Home Or Sell It?
If you’re on the fence about what to do with your property, the above information can be a huge help. It can be difficult to determine whether to rent out your home or sell it, but the above information can help you make a more solid and final decision.
Need more help learning about rental properties and how to maximize this kind of investment? Reach out to us any time and we’d be happy to help.