Take the Sale Profit or Become a Landlord
If you don’t need the cash from the sale of your home, then renting might be a great option for you. If, however, you do need to get a quick return on your investment in order to buy another property (i.e., if this is an investment property), then selling may be more attractive. Either option can be a good choice, but you want to carefully consider your options. To help you sort through the confusion, here are some tips from Emil Ratti.
Discussion on Selling vs. Renting Your Rehabbed Property
There are a number of considerations to make when deciding between selling and renting. If you need cash quickly, selling is usually the better choice. This is because investors can typically get more money by selling than they can by renting in the short term (after rehabbing). On the other hand, if you want to hold on to your property for a longer period of time for recurring revenue, then you may want to keep it as a rental. Each option has its own benefits. Read on to learn more about each.
The Benefits of Selling
Selling your property immediately can be a very profitable transaction. You can get a quick return on your investment and have the money to use for another property. This is also much more hands-off considering you avoid all the responsibilities of being a landlord, which is many! If you sell the house, it is also gone! You won’t be responsible for any maintenance or repairs as well.
The Benefits of Renting
By renting your house you have the opportunity to make a lot of money off of it. You also get to keep it for potentially a very long time. Rents tend to rise, as do property values. You can always rent out the property to someone else when you need money or if you want to move away (not an option with selling).
You will also have more control over who your tenants are and can require them to take good care of your house. It's very important to properly vet your tenants to ensure this happens.
Lastly, there are some good tax benefits of owning rental properties. You can take quite a few deductions for work related to the property and you can also take advantage of depreciation.
Things to Consider as a Landlord
As a landlord, there are many things that you will be responsible for. You have the responsibility to find a good tenant (i.e., credit and background checks), make sure they have an appropriate lease in place, and that they pay rent on time.
You will also need to make repairs as needed (i.e., plumbing, electrical, water heater, etc.), though it’s also possible to require your tenants to pay for the repairs. Additionally, you will need to hold on to some funds in case major repairs are needed in order to ensure your tenant remains satisfied with their rental. Lastly, you need to have key contractors on speed dial for possible property fixes or even upgrades. Remember to vet their qualifications and reviews!
It can be worthwhile to have coverage in a home owners warranty for many repairs. This can help balance the costs of electrical, plumbing, and HVAC repairs that will crop up over the course of owning a property.
As you can see, there are a multitude of considerations to weigh when deciding whether or not to rent out your property. It's important for homeowners to consider all the pros and cons before making this decision so that they make sure it is in their best interest long-term. If you're uncertain about what option will work best for you, carefully consider everything we've discussed in this article.
If you need assistance with residential real estate in New Jersey, trust real estate agent Emil Ratti with your business.
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