Sell or rent

Making the decision to rent or sell your home is a tough decision. Renting can have a lot of financial benefits and can provide a nice profit. However, to make the decision on finances alone is a mistake.

Trying to make such a decision comes down to many different factors such as: financial, personal, and even economical. Each person’s situation is different. All of these aspects need to be considered to help you make the best decision for you and your situation.

This past week, a friend’s brother was facing this exact situation. He is trying to make the decision on whether he should rent or sell his home. He feels torn. His family has outgrown his current house, and he is in the process of building his next home. Financially, they would like the equity they have in the current house to put towards their mortgage on their new house. However, they bought their current house at the height of the market in 2006, and they know that selling today means taking a substantial loss. He is considering if the benefit of waiting to sell and renting instead is worth the trouble.

To make sure you are making the best decision for you, here are 3 considerations to help you feel good about whatever direction you choose.

  1. Evaluate Your Property as an Investment

According to one professional, “Determining whether a property is a good investment takes research and analysis, and it is wise to take your time in making a decision because it’s a major one.”

Do a comparative market analysis to help you determine what the current market is looking like in your area. Rent prices are soaring high in many places, and choosing to rent versus selling might make a lot of sense. If you are not sure how to do this, ask a real estate agent or broker for their insight and advice. They can help you conduct a market analysis on your home.

In addition, it is wise to take into account how much money you will have to spend to get the house to market standards. These are all ways to help you evaluate your property. If you fear you will have spend a great deal of money to keep the property in good condition such a replacing pipes, or anticipating a new roof for example, it might impact the decision to determine if this property is worth hanging onto.

  1. Evaluate Your Long Term Situation

Determining the value of your property and how much money you will have to invest to keep the home at market standards is just one step. Having a good idea of the area in the long term is another wise aspect to consider.

Take time to evaluate the neighborhood and school system. Is this an area where you see the value of the home improving over time? Or, do you see the beginning of a declining area?

Take into account how much you will be paying per month to keep the property running. That means calculating mortgage payments, real estate taxes, insurance, association fees, and any other assessments. This will help you determine how much you will need to charge for rent to make a profit. If you are caught in a high mortgage and interest rate, renting might not be the best decision for you. It is also wise to compare this monthly rate to the market in your area. Will you be able to make enough profit to cover the possible expenses along the way?

  1. Ask Yourself Tough Questions

When it comes to renting out your house, there are not just financial aspects to take into account. Emotional and personal aspects need to be considered. Ask yourself questions like, “What happens if something breaks?” Do you have the cash flow to make the repairs? If not, are you willing to go into debt? Is taking on debt worth it for the long hall?

Renting out property takes personal time. How will you handle getting calls late at night because a pipe has burst? Are you handy or do you plan on hiring someone to make the repairs? What will happen if your tenants don’t or can’t pay rent? It is important to evaluate the personal cost versus the financial benefit.

Wrapping Up

Weighing in all these factors will help you make a great decision: evaluate your specific property, look at the long-term situation, and ask yourself the tough questions.

For my friend’s brother, he is still analyzing all these considerations and what is right for his family. Take your time and feel good about whatever direction you decide.  It is a personal one only you can make to determine what is right for you, but it is one you can be educated and feel great about.

Having an experienced real estate agent share their insights will be of additional help as you make this decision. If we can be of any help, please call today.

248-348-7200