HDTV made it more apparent to the average consumer that people utilize rental properties to generate passive income. There are shows that promise a seaside property for far less than many people imagine in terms of price. Other shows on this channel deal with some of the nightmares associated with renting out a property. Dealing with tenants that damage a property or need to be evicted can end up costing money to the property owner versus generating income. Cash buyer’s like Sol Green Homes from South Florida can be a great option for those that want a quick selling process or to be given a fair offer on the home.
The best thing that can be done is to be proactive about the research done before renting or selling. An informed decision is far better than a guess then hoping for the best. Covering all the bases when renting out a property is important as a minor error in a lease might allow a tenant to leave without notice. The following will outline the pros and cons of renting a property versus selling.
Getting A Large Amount Of Cash Now
The most obvious negative of not selling a property is that of not getting the money for equity in the property. At times those people that are buying new homes need to sell their other home in order to have enough money for a down payment. Consider selling the home privately to a cash seller as this will reduce fees paid in commission to a real estate agent. After a home is given a valuation selling will become much more clear depending if the value is high or low.
For people that are looking to downsize or retire this large amount of cash put into an investment of some type might generate more income than renting a home. If moving across the country it can be difficult to manage a property or even get a call back from a property management company. This can cause more stress than it is worth especially if the rental market is not healthy in the area.
Selling a home can be a quite stressful event when dealing with offers that fall through or an inspection that drums up huge repairs that need to be made. There is a chance that with these types of offers expenses will be incurred to keep utilities on when the home is still being shown to potential buyers. An agent also might just want to close a sale rather than get the best price for the home so getting a personal referral for an agent is wise.
Property Management Companies Can Help
There are plenty of property management companies that can do a great job doing everything that is needed with a rental property. Obviously certain repairs need to be covered by the owner financially but things like writing leases and collecting rent is the responsibility of the property management company. This is a good option for those people that are looking for truly passive income as great management companies will take care of nearly everything.
The most important facet of a property management company could be their vetting process for finding renters. The last thing that anyone wants is renters that have a history of treating rentals horribly or always seem to break a lease early. Pulling rental history as well as getting references from former landlords are just a few of the things that the property management company can handle as they do it daily.
These companies charge different percentages of the monthly rent but the percentages are not usually very high. There is a possibility the company rents out the property at a far higher price than the owner would have listed it for. This in itself could cover the fee charged by the company.
Investing Money To Keep Property Updated
Maintenance on rental properties can be a drain on the owner’s finances depending on what needs to be maintained or repaired. Getting the home in good enough shape to rent is also a possibility that can cost thousands of dollars. Things like air conditioning units needing to be replaced can happen without proper maintenance. Have a pro come out a few times a year to check the AC as replacing the system can cost a year’s worth of rent in specific cases.
When deciding whether to rent out or sell a home these costs need to be factored into the equation. Money will also have to be put aside for property taxes in the area which needs to be considered when setting a rental price. For those that do not have the finances to deal with keeping the property updated in case of emergency need to strongly consider selling.
Allowing A Property To Increase In Value In A Healthy Housing Market
There are certain areas where homes are increasing in value at exponential rates. Selling a home in this type of market would be fiscally irresponsible especially if income can be generated through rent. Luckily there are websites that come out with market reports for those that think a real estate agent needs to be consulted. Once there has been a decline in the housing market in the area then selling can be considered again.
The one thing that has to be done is to consider the future of the area if it is slowly building up. There are once rural areas in the US that now have some of the most expensive real estate in the country. Look at trends and similar areas when deciding whether renting or selling is the right move.\
There is no one correct answer whether to rent or sell a property as everyone has different financial statuses and goals. The last thing that a homeowner wants to do is to allow a property to sit vacant without renters with a housing market that is stagnant. Luckily there is enough information online that a person can educate themselves with in terms of real estate.