If you’re looking at your home as an investment, you have two major options: renting or selling. Both options have merit, but which one is better? Here are the factors to weigh when determining if you should rent or sell your house:
Are You in a Good Rental Market?
Compare your mortgage payments with your projected rental payments. In some areas, rent is much higher than a mortgage, making renting is more lucrative. In other areas where rent is about on par a mortgages, rentals won’t be as profitable. In good rental markets, it’s also easier to keep properties filled; in more competitive markets, you may need to do a lot of work on the property.
Is the Property Move-In Ready?
You may need to sink a lot of money into your property before it’s a viable rental. Take a look at the rentals in your area and the amenities they provide. You want to provide a space with competitive options. For example, are you going to need to update the floors and counters?
Do You Want the Property in the Future?
If this is a property that you know you might turn into a second home or vacation home, or that you might want to give to your children or grandchildren, then renting it out in the short term may be better than selling it altogether. What’s best for you depends on your future plans.
Can You Commit to Maintaining a Rental?
If you’re moving out of state or just don’t have time, you’ll have to work with a property management company to manage your rental rather than managing it yourself. These costs will cut into your projected profits. Don’t underestimate the amount of time it takes to maintain a rental. Renting is often not worth it if you don’t have much time available.
Is the Market Moving Quickly?
If property is appreciating in your area quickly, that may be a reason to hold on to your property and sell later. But if property values have remained static for some time, gaining a little equity year by year might not be enough to justify keeping the house.
Can You Afford the Mortgage?
If rental income doesn’t come in, can you still afford the house? Many rentals are vacant at least part of the year, and disasters can happen that make it difficult to maintain rental income. If you can’t afford your mortgage without rent income, you should reconsider holding onto the property.
Do You Have Other Debts?
Selling your house gives you a lump sum that you can use to resolve your other debts and start living your life again. While rental income does give you some income, it’s distributed over a significantly longer period of time. There are many benefits to having a lot of cash at hand right away when restructuring your financial situation.
Are You Interested in Buying Another House?
By selling your house, you can get a sizable down payment on your next house. This is especially important if you’re looking to get a more expensive house. If you don’t sell your house, you may not be able to put as much money down as you wanted to, and that’s going to inflate your future mortgage payments. Your mortgage lender is also going to consider the fact that you have two mortgage payments to pay.
If you decide to sell your home, Virginia Home Buyers can help. At Virginia Home Buyers, we’ll buy your property in cash right away. Don’t waste time fixing up your property or beautifying an “ugly” property. We’ll take care of all of it for you. Contact us today to find out more.