Well of course, I’d rather have their homes for sale as it means business for me and other realtors. However just like what I always say “It’s not all about the numbers; it’s about helping people”. I will provide you with my honest opinion based on my experiences in the industry and feedbacks from my clients of renting, buying and selling.
There are a lot of factors to consider and I will just touch base on the basic ones. What was your reason to leave the house? Is it job relocation, or your family has outgrown your house, or you saw a new home in your most desired neighborhood? Whatever your reasons maybe you have to consider your financial situation. Will you be approved for a loan on another mortgage without selling your primary residence? If the answer is NO, then sell the house. You may consider the rental income for you to get approved but that is not in place yet. Meaning, you have to put up your property for rent first and produce a Lease Agreement before the income can be considered. Another question; do you have enough equity to pay for the closing costs and agents’ commissions? If the answer is NO, then you do not have a choice but to stay until you get enough equity for a down payment on a new house and pay all the costs of buying and selling.
Supposed, your answer is YES to the above; good for you. Now, let’s do the math. How much is the fair market rental rates in the area? Is it enough to pay the monthly mortgage, taxes, insurance and interest; we also need to add HOA/Condo fee plus set aside for repairs and unexpected emergency calls. If the housing market in your area appreciates that quickly over the years; then it may be wise to do it and recover the monthly losses when you sell the house eventually. For example, if the monthly rental is $1,500 and you pay the bank $2,000 a month including tax and insurance plus $100 HOA fees; then you are short of $600 a month not considering repairs etc. If the tax assessment or fair market value every year does not even come close to your losses every year; forget about renting; just sell it.
Are you ready to be a landlord? Lucky are those who found tenants that pay rent religiously and no other issues for the longest time. I’ve met people who lived in their apartment or rental property for almost 20 years and they took care of the property as if it’s their own. These are landlords’ delights. What if you are not lucky and have tenant who is a constant complainer and always late or sometimes miss rental payments? Worst scenario, you will find yourself in the eviction process and dealing with a lawyer and court costs. No rental collection during this process so it’s a double loss for you. If they happen to get evicted, pray that they do not do anything to damage your property. There are companies that render services as Property Management so you do not have to worry and they charge a portion of the rental every month. If you are not into this league, save yourself the hassle and just sell your home.
On the other hand, let’s say your property is almost paid off and you are qualified to buy another primary residence. Then it is definitely a good idea that you accumulate equity over the years while others are paying your mortgage and this is a good cash flow. Whether you sell or rent your home, you have to prepare it as to repairs and upgrades. If you are an investor and you do this as a business for a steady cash flow; then go for it. You may be an expert by now or still learning the process.
Whatever route you may take, even if you decide to put your home for rent and if it didn’t work out, you still have the option to sell. Charge it to experience and wish that the experience did not cost your full savings and the stress is not that bad.
Note: Jocelyn Porteria is a Realtor® licensed in VA. Top Producer of Fairfax Realty and earning Five-Star Reviews from her clients. She is a Certified Expert Negotiator and also earned a designation as an Accredited Staging Professional; ABR, Accredited Buyer’s Specialist; CDPE Certified Distressed Property and Short Sale Expert, For more info, visit her website at www.jprealdeal.com and on Facebook https://www.facebook.com/realdealconsulting. Call her at 571-432-8335 or email at firstname.lastname@example.org for free confidential consultations.