5 Key Variables When Considering to Rent or Sell
1) Does Your Property Cash Flow
The first thing that we want to look at when we are making our decision is the numbers, because if the numbers do not work, it just doesn't make sense. So when we say "does this property cashflow" what we mean is, will you be producing a monthly profit or loss after we deduct the monthly rent from expenses such as mortgage, taxes, insurance, utilities, management, vacancy, repairs and any extra costs that may be associated with the property. (To learn more about evaluating a property Please contact us at www.KINGSTONHomes4U.ca). If after you make these calculations, you are looking at a loss, we suggest that you consider selling. (unless you are under the impression the property will greatly appreciate over the years - but don't count on it)
2) How Much Will You Make When You Sell
Now it is time to take a look at your return on your investment. Since when you sell, There will be some associated costs from agent commissions, closing costs and additional fees. You have to consider what your net profit will be from the sale. This will be determined through how much equity you have in the property. If you will be making little to nothing on the sale of your property and you will cash flow on the property if you rent, then consider holding onto the property to rent.
If you run your numbers and you are going to take home $100,000 on the sale of the property and you are only going to take home $2,000 dollars per year in cash flow. That is a 2% return on investment. If this is the case, take the $100,000 and reinvest that profit.
3) Consider The Future Conditions For Your Location
Predicting the future is no easy task (lol) but we want you to consider what the value of your home will be in the next 5, 10, 20 years. If you are unsure how to do this, we want you to consult a real estate agent, they should have some detailed information to give a better forecast of what the value of your property will be in the coming years. If the future of your neighborhood does not look bright, you should consider selling now to eliminate any troubles in the future.
Have your real estate agent look at the growth of your city, the popularity of your neighborhood, if there are more jobs coming to your city, if the population is growing among other variables. There is no perfect predictor of the future, but by examining these numbers, you will gain a better understanding.
4) Is Being A Landlord Right For You?
If you have never been a land lord before its not all butterflies and roses. Many people are simply not cut out to become one. No matter how well you screen and qualify your tenants there is always a chance that you get caught with a tenant that is needy and requires more of your time. The good thing for you is that landlording can be learned and improved upon. There are several books, online educational sources, blogs and podcasts that you can read and listen to in order to gain more insight on the topic. Also, if you feel that you are not cut out for the job, you can always consider hiring a professional management company to take over these duties and deal with the tenant for you.
5) The Current Condition Of Your Property
What is the current condition of your home? Is your property in pristine condition where you would have no problem selling your property or are there a bunch of miscellaneous repairs that need to be made in order for you to sell. Renter's more than buyers, will be willing to look past these few repairs, outdated fixtures because renters are aware that they will not be living in this property forever. If you do not have the extra money laying around to put into your property to make the necessary repairs needed to sell your home, then maybe you should consider renting the property out.
So, Should You Rent Or Sell Your Home
As we've learned that with anything, there are pro's and con's to any situation. We also learned that it is possible for you keep your old residence and go out and buy a new one. However, deciding to rent or sell your home is decision that you and only you can make after weighing all of your options (& getting assistance from professionals in the industry). We want you to take a look at the variables discussed above and make a decision that will be beneficial for you and your family in the future.