If you’ve been toying with the idea of moving, but you aren’t quite sure whether you should sell your present residence or keep it as a rental property (and in turn, as a possible income stream), there a some important factors to consider that may help you to decide whether to sell or rent.
First, you need to decipher whether or not your property will actually produce a positive cash flow for you. Even if you’ve already gone through the process of buying and updating your current home, there can be a number of expenses that are associated with keeping it. In fact, if you do choose to use it as an investment property, you may even find that there are added costs.
For instance, in addition to PITI – which stands for your mortgage principal and interest, along with taxes and property insurance – you may also have to pay property management fees and / or repair / maintenance costs. Plus, depending on what you offer to your tenants in the lease, you may also end up paying some or all of the utility bills.
With that in mind, be sure that you factor in all of these costs – plus an additional amount of “cushion” – and subtract them from the amount that you think you can generate in rent. In doing so, check out what other similar properties in the area are renting for.
Second, you must also consider whether or not you truly want to be a landlord. In this case, do you have the time and the experience to find and screen potential residents? And, if you aren’t considered to be the handyman type, you will also need to think about how repairs and regular maintenance will be handled.
Another key factor to consider is where the properties in the area are going in terms of value. In other words, are the property values primarily going up or down. While you may not have a crystal ball, if it appears that values are declining, it could make sense to move forward with a sale.
If you decide that selling your home will be the best option for you, we can help. Give us a call and we will provide you with more details on how to best market your home, as well as a no obligation estimate of its current value.
