Once you’ve made the decision to move—whether headed across the country or across town—you might think the automatic next step is to prepare to sell your current house. True, that has to get underway without delay…but there should be one intervening step—one which all too frequently gets short shrift.
The key decision to be made before you put your house on the market is just this: should you sell at all? The fact is, you may be in an opportune position to hang onto the property. To become a landlord. In case you have never considered the advantages and drawbacks to owning a Midlothian rental home, you may be overlooking a worthwhile opportunity.
Before you decide whether the right sign to plant outside your home should read “For Sale” or “For Rent,” pause to consider some of the major Pros and Cons—-
Pro: Long-term ownership
If you aren’t quite ready to say goodbye to your home, renting it allows you to make the decision at a later date. Managing your local rental home gives you the opportunity to watch its value appreciate before selling, or even to return to it yourself.
Pro: Potential savings
The housing market’s recent fluctuations aren’t typical, but for anyone who bought when housing prices were soaring and would now have to sell for less, the prospect would be disappointing. In those circumstances, turning your residential investment into a Midlothian rental home can help avert a financial loss….
Pro: Investment income
By way of taking that basket of lemons and turning it into a lemonade stand, RealtyTrac’s most recent study (July) of residential property rentals revealed a 9.97% annual return for residential property investors in the second quarter of 2014. In other words, in addition to covering your mortgage, monthly rent might bring in a profit…turning what looked for so long like a real estate loss into a money-maker.
Con: Landlord responsibility
When you don the landlord’s hat, you have to respond to any maintenance issues with your local rental home. In addition to incurring the expenses of maintaining your rental home, you also have to be on top of the problems that every homeowner knows about. If your move is to another city or state, that might require local assistance, which comes at a cost.
Con: Tenant wear and tear
If you plan to sell the home eventually, it’s probably in better shape now than it will be after your tenants move out. Some wear and tear is expected, but you can’t ensure that your tenants will leave the home in pristine condition. The security deposit doesn’t always cover all fixes.
Con: Management work
In addition to responding to maintenance issues with your rental home, you also have to attract and select appropriate tenants. You might opt to outsource this work to a property management company specializing in managing Midlothian rental homes. Again, such a service takes a bite out of the monthly rental income.
Weighing the pros and cons as you evaluate your personal and financial situations will aid your decision on whether selling or renting best meets your long-term goals. In the meantime, call me anytime for a sales vs. rental pricing evaluation!