There are a lot of factors to consider when it comes to renting or selling your home. You’ll need to think about the mortgage you’re paying, the value of your home, its rental value, and a lot of tax implications. What it really comes down to is your short term needs and long term financial goals.
In some cases, selling versus renting is pretty easy. If you need the equity in your home to buy a bigger house, go ahead and sell. It gets more complicated when you’re evaluating the long term investment potential of your home.
Should I Sell or Rent my House? Property Condition
Let’s start with the condition of the house. If you want to sell the home and it’s been some time since you’ve done upgrades and updates and it’s looking a little dated, you may need to invest some money in making improvements. You may want a new kitchen or bathroom. Decide whether you have the cash to make these upgrades so you can get the highest market value for your home.
On the other hand, renters will usually be a bit more forgiving when it comes to high end upgrades. They are willing to accept a more dated rental property. If you cannot put in the stainless steel appliances or hardware floors, you may want to rent your property for a while so you can build up some cash and have that money coming in. This gives you an opportunity to increase cash flow so you can make those upgrades down the road and ultimately sell it.
Relocating and Potentially Returning
Maybe you’re relocating for a job and you’re considering whether you’re coming back to the area eventually. Perhaps you’re not sure what to do with your current home. If you sell it, you have to pay commissions and sales taxes. There are a lot of fees for a sale. If you look at renting, remember you have up to three years without having to pay any capital gains on an investment property. So, you can rent it out for a while as you determine what to do with it. This will help you earn some cash flow and offset your mortgage or other expenses. While you’re doing this, you can find a new home wherever you’re moving. This might take away some of the stress of relocation.
Will Your Property Cash Flow?
Consider whether you can get enough rent out of the property to cover your current carrying costs. You need to know if the rent will cover your mortgage, HOA fees, insurance, and other expenses. If it can, then you have someone else paying your bills for you. The property will be maintained and grow in value. If you own the property free and clear, you’re getting a positive cashflow property, so it makes sense to rent. If the rent you can bring in doesn’t quite meet those standards, you may want to sell the home. You don’t want negative cash flow coming out of the property.
Property Management Scottsdale
The final thing to consider is how you feel about being a landlord. This is an investment property. It’s going to have expenses, regardless of who is living there. You must understand that you need cash set aside to offset any expenses that come up. Your roof might start leaking, your air conditioning might go out, and an appliance might need to be replaced.
We can help you plan through this process by providing you with a 10-year cash flow analysis. If you’re looking at selling versus renting your home, or you need any help with Scottsdale property management, contact us at Keyrenter Premier Property Management. We’ll look at your cost and your potential and help you determine what your long term financial strategy should be.