Perhaps you’ve inherited a home. Perhaps you’re relocating to another city for work. Perhaps you’re a homeowner who is moving in with their partner, and now have a house on your hands.
It’s a good problem to have, but that doesn’t mean that you’ll automatically know what to do. There are instances when selling the property for a lump sum makes sense. There are instances when renting out the property makes sense. Both are effective ways to cash in on a property that you no longer need to live in, but choosing the right path requires some thought and consideration. In this post, we’ll run through some of the key factors to keep in mind before making your decision.
Your Financial Goals
From a simplified financial perspective, selling vs renting typically comes down to one question: would you rather receive a lump sum of cash (via selling), or would you prefer to have recurring monthly payments (via renting)?
This one can be tricky to figure out without having some hard data to hand. Booking a valuation can give you a clear understanding of the property value, which can tell you what you might expect to receive should you sell the home. Looking at monthly rental prices for similar properties in the local area can give you a ballpark figure for what you might receive in rent.
Current Market Conditions
Even if you’re drawn to either selling or renting, the market conditions might gently guide you in the other direction. If it’s a seller’s market in which there’s plenty of interest from buyers and high sale prices, then it might make sense to cash in by selling. On the other hand, if the rental market is strong — rising rents with plenty of demand — then renting, even on a short-term basis, might make sense. Speaking to a local real estate expert can provide the market insights you need to make an informed decision.
The Costs and Responsibilities of Renting
You might be interested in renting the property, but if you’ve never been a landlord before, then it’s worth taking a close look at all the additional costs and responsibilities that are involved. While it can provide an income, a significant chunk of the rental price will need to go towards additional expenses, such as insurance, gas and electrical checks, and general maintenance and repairs. There’s also the matter of time — if your tenants have an issue, then you’ll need to handle it in a timely fashion. You can get around that issue by hiring a property manager, but that will also eat into your profits.
Your Future Plans
Finally, think about what you might want on a longer-term basis. Is there a chance that you might want to move into the property in the future? Then renting is the way to go. If you know that, realistically, your time with the house is done, then selling could make sense. If you’re unsure, then stick to renting — you can always sell in the future if that’s what you want to do.
Feature image by Thirdman on Pexels.
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