Should sellers sell or rent their homes this year? Check out these 3 thoughts from Jillian.
Should you sell your home or hold onto it and rent it out? Here are three things to consider:
1. Look at your own personal goals.
Do you want to be a landlord? I myself am a landlord and have reasons as to why I kept one home I bought (a condo) and not the other (a townhome). I bought the condo with the intention of holding it long term after living there for a few years. There are minimal repairs that are going to come up in that space versus a single family home or a townhome. I was also strategic in how I planned my downpayment and monthly payments to accommodate the rental market. Now, my townhome. One day I am going to wake up "kicking myself" that I didn't hold on to such a great place in Old Town, BUT I wanted to use my equity from that purchase toward not only my next home but also furnishing my next place.
I currently am in a "forever home" (More like a 10-15 year but that sounds like forever to me) and I wanted my adult furnishings. It was time for me to retire my Ikea couch from 2009. I also didn't want to add the stress of a tenant asking me about repairs, yard work being potentially neglected, etc. with the town home. I love that home but it was time for me to let it go and not have the anxiety of worrying if a tenant would pay that mortgage on time, would take care of the home the same way I would, or even just not call with every question on "how does this work". It just wasn't the right investment property for me - even though I had roughly a 3% interest rate on it and over 25% equity.
2. Look at your financial situation and determine what you can handle.
The rental market is strong but it is never guaranteed. The benefit of owning a rental is that you have someone paying down your mortgage and building equity. Not only is someone paying down your principal and interest, covering your taxes & insurance, but they are also helping you hold the home overtime to continue the home value's appreciation in the market. There are A LOT of benefits there and I am a huge advocate for owning investment property.
On the flip side, you will want to be sure that the combination of those long term advantages also exceed the financial risks. A home will typically sit vacant, with utilities back in your name, for approximately one month prior to getting a tenant (or the next tenant). That is one month of lost income. Then there are still the costs of home maintenance that are the owner's responsibility. In cases where tenants vacate or run behind on rent, you will not have the safety net of monthly payments to afford both homes.
3. Talk to your local lender, realtor, and tax advisor.
This is arguably the most important step in a seller's journey - to sell or not to sell? That is the question. Luckily, it is not one you have to answer on your own. Use your local experts to help develop a game plan for your home that is tailored to your personal goals and financial portfolio. Depending on how long you have lived in the home, there could be some significant tax benefits of selling.
Just remember that these individuals will help you list the pros and cons of selling or renting in today's market, in the end, empowering you to make your final decision as a homeowner.
That's all for now!
'Til next time,
Jillian
Have a question about real estate? Email Jillian!
