How do you decide if someone should sell or rent their home? I was recently promoted at my job and we’re scheduled to move to Denver in about two months. Do you have a set of questions we can ask ourselves that will help us know if we’d be better off renting or selling? We’d really appreciate any guidance you have to give!
Derek, Grand Junction
Congratulations on your promotion! A promotion generally means there are good things ahead for you and that is exciting. There are so many things to consider when you are deciding whether it is best to rent or sell? I will give you a few questions to ask yourself and these should help you evaluate which decision is best for you and your family. Keep in mind this is just the tip of the iceberg. There are countless other things to consider, but these are the biggies.
Are you cut out to be a landlord? Some people are and some are not. You have to accept that your renter will not take care of your old home like you did. For some this is one item proves more stressful than some can handle.
Will the property cash flow and if not, can you afford for it to be short month after month? Remember If your mortgage is $1,600 per month and you can only rent it for $1,300, you will be coming out of pocket $300 per month (plus maintenance) and that will quickly add up to over $4000 -$5000 per year. Can you afford the payments in full if it sits empty for a month or two or three?
If your renter does not pay or are constantly late with their payments, are you built to handle conflict? Do you have the personality to evict them?
Do you have the time to manage a property from out of the area? Renting a property out will take extra time, some more than others. Answering phone calls, scheduling maintenance, repairs, property checks…all this takes time and doing it from afar can be really risky.
Are you pretty sure that the market is headed in the right direction? If you are holding on and the market is trending down the upside for renting it out will only be if you are going to hold it long term.
Remember, not all renters are created equal. Some are easier than others. If you decide renting is the right choice, but don’t want the potential headache you can always hire a property manager. Trust me, it can be the best 10% you ever spend! Even though renting might be an appealing option, don’t underestimate the upside to just selling and moving on.
If you decide to just sell you can walk away and move on and that can be huge! If you don’t plan to come back, then you are just prolonging the inevitable and in many instances just ripping the band aid off is the best option…even if it is painful at the time! Don’t undervalue the freedom of being able to leave the old house in the rear view mirror. If you have equity in your home, you can use that equity for a down payment on your next home. Selling also relieves you of the stress of dealing with renters and the maintenance of a home that you are no longer living in.
Honestly, my experience has shown that selling is the most popular choice if you are moving out of the area. If you do decide to rent it out, I would highly recommend you hire a property manager and NOT go the “do it yourself” route. Best of luck with the new gig and Merry Christmas!
The Kimbrough Team