If you’re a home owner who is looking to move, selling your current house probably seems like the obvious choice. It should take care of your existing mortgage. It may even give you a nice chunk of money for a down payment or renovations for the new home.
For many homeowners, it’s a great option. But it’s not the only option. Depending on your situation, it might not even be the best option.
The alternative to selling your home is renting it. This can provide you with a constant stream of cash rather than one lump sum. With a little paperwork and advertising, you could take your first step into the world of property management.
Before you decide on either option, you need to consider a few things.
Is Your Mortgage Upside Down?
If your home is worth less than what you can sell it for, renting might be a better alternative. Foreclosing or short selling your house is an option, but your credit will likely suffer the consequences.
Renting, on the other hand, could allow you to save your credit while turning a steady profit. Of course, that depends on another condition.
Can the Rent Cover Your Mortgage (and Maintenance Costs)?
In order to successfully rent your house, you’ll have to charge more than your mortgage payment. In fact, you’ll have to plan for additional costs, from maintenance to taxes. Those in desperate or temporary situations may rent their home for a minor loss (or just break even), but ideally, you want to make money when renting a home.
Now, maybe you find yourself in a healthy situation where both selling and buying have their positives. If that’s the case, here are a few more things to think about.
How Sellable is Your Current Home?
As styles, trends, and markets change, some houses become less appealing for potential home buyers. Depending on the current layout and condition of your home, it might not attract a lot of buyers, even if it’s priced correctly.
Truth is, some homes have more appeal as rental homes than they do as homes for sale.
If there’s not much potential for changes and renovations in your home, it might be better to rent it out.
Is the Neighborhood Rising or Declining?
Neighborhoods change with the times. If your home is in an area that’s on the decline, it’s best to sell it now. Otherwise, it’ll likely lose value, and you won’t be able to rent or sell it for as much.
On the other hand, if the neighborhood is on the rise, it could be beneficial to hold on to the home for a while and sell it a few years down the road.
Can You Handle the Responsibility of Renting?
With being a landlord comes new responsibility. You have to keep your tenants safe and happy with their home. You have to make sure things are functioning properly. You may get phone calls at inopportune times.
Many first time property owners underestimate the responsibility that comes with renting out to someone.
Of course, it doesn’t have to be that complicated. A skilled property manager can handle virtually all of your responsibilities, from collecting rent to finding renters to scheduling maintenance, all for a surprisingly small fee.
If you’re in need of San Diego property management, we’re here for you. Contact us today!