Key To Success: Choosing Between Renting And Selling

If you own a newly remodeled property, you may be faced with a classic dilemma - whether to rent or to sell. The answer is rarely straightforward and it’s worth carrying out some research if you want to identify the most profitable, most logical route forward. Here’s what to consider before making a decision, presented by Revitalize Realty.

If you have a functional, legally owned property and rooms to spare, then renting is always a viable option. But before you commit to this path, there are some things to consider. The first of these is the state of the market - current trends suggest an increase in renters meaning landlords can command higher rates (although this may not always be the case). Renting can also be a good way to bide time during a buyer’s market, as high supply and low demand drive down prices (which can result in losses on a sale). Before you advertise, consider the quality of renters in your area (ages, demographics, wealth) - with consistent, reliable, and well-mannered tenants, you can expect profit without too much hassle. In this ideal situation, your income is passive and your equity will continue to build.

Even with amicable tenants, being a landlord entails a lot of responsibility. If you’re planning to rent out, you’ll need to be willing to sink hours into the process of screening tenants, answering emails, handling security deposits, maintaining the property, negotiating contracts, and, of course, collecting rent. This role can also be unexpectedly costly - on top of your mortgage payments, you’ll have to keep on top of repairs and, if you don’t have time to do all of the above on your own, you may also have to pay for services. Property managers can help manage tenants on your behalf, collect rent, and even file taxes but you’ll have to weigh the benefits of their service against the rental income. Property management is generally priced at 10% of the monthly rent and services may vary from company to company.

In the current housing market, there is always going to be a temptation to sell, especially if your property is newly remodeled. There are, however, a number of key considerations to make before you list - for example, if you recently refinanced, can’t afford to buy elsewhere with current housing prices, haven’t built equity or if you’re liable to pay hefty capital gains tax then it may be better to wait. You’ll also need to factor in the costs of selling - you’re likely to pay large quantities for staging and realtor fees and these can often stretch to 10% of the sale price. Even in great market conditions, the logic of this decision is dependent on your personal financial circumstances and you’ll need to weigh the costs against your balance sheet.

On the other hand, if you can afford the overheads, selling at the right time and under the right circumstances can represent a huge, positive financial step forward. In 2021, rising house prices have meant boosted equity and properties are still selling at a quick rate. Mortgage rates are historically low with interest rates sitting around 3% over 30 years fixed - if you act quickly, you could lock yourself into a favorable payment for the foreseeable. Ultimately, the reasons for selling are dependent on your circumstances, whether you’re ready and whether the market facilitates a smart move.

It’s worth bearing in mind the option of researching foreclosed homes for sale. These are properties that were foreclosed and ownership passed on to the bank or lender. Oftentimes, real-estate-owned (or REO) properties will require some renovations, but they can also represent excellent investments for a savvy buyer.

As you decide between renting and selling, it’s important to remember that there’s no guarantee either decision will work out smoothly. However, if you’re ready to carry out research and keep a close eye on the market, you can maximize your chances of success and minimize the risk of losing money.

Revitalize Realty is the number 1 property management and real estate company serving the Gulf Coast of the United States since 2011. To learn more about our services, visit: www.revitalizerealty.com

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