Should I rent my home or sell it?

You have to relocate for a job or need to be closer to family. Maybe your home has become to big for your needs or you have outgrown your home. It doesn't matter what the reason is, right now your home just isn't working for you.

If you find yourself in this position, it might make you feel a little sick when you start looking at the home prices in the neighborhood. Before you get too upset or worked up over the thought of not being able to sell your home, I want you to know that there is another option. You can become a landlord and turn your home into rental property.

Before really considering this option, you need to decide if you can afford it. You need to be able to cover the mortgage payment and the rent or mortgage of the place you are moving to.

Once you have decided that, you need to figure out what your home would rent for. Depending on your mortgage you may or may not be able to cover the monthly expenses with the rent payment. If you can collect 80%-90% of your monthly expenses, it may still be worthwhile to pursue renting your house out. A typical lease will be for one year and that may be enough time for the market to turn the corner and reduce the competition.

Next you need to decide how you are going to find a tenant. Are you going to do it on your own or utilize an agent that can help market the property? Using an agent has some benefits, the agent is able to use the resources available to market the property to a wider audience and put together a contract that protects your best interests. The agent should also have an application process in place that screens tenants for credit worthiness or anything else that might throw up a red flag. The cost for doing this is typically equal to one months rent.

You can also use the agent or another management firm to manage the property for you. By doing this, you are relieving yourself of the day to day issues and hassles that can come up with managing rental property. The management firm will collect the rent, handle any repairs that come up and deal with any tenant issues that come up throughout the term of the lease. Coldwell Banker Residential Brokerage’s fee for this is 8% of each months rent.

You must also realize that the competition in the rental market is pretty strong. We have an abundance of apartment complexes and townhomes that have the means to offer deep discounts and even free rent for a period of the lease. In the end, you need to decide what your overall goals are, do you need to sell the house fast, even if it means making little to no money or do you want to rent your house out, hopefully covering expenses, and wait for the market to pick back up?

You also need to consider the expenses you will have after a tenant moves out. Tenant’s do give you a security deposit, but that can only be used for repairs outside of normal wear and tear. At a minimum you will need to plan on painting the interior, cleaning the carpets, and have a professional do a thorough cleaning job.

If you want to discuss the details and possibilities of renting out your home fell free to call or email me.