Blog Post

Should I Rent or Sell My House?

1946638 • August 8, 2024

If you are considering living in another area, you may be caught between deciding to rent out your home or selling it for a good profit. This can happen when you have paid off the property or have finished renovating it.

Some may also seek to live in other cities but are not sure if they will be coming back. As an additional source of income, renting out your real estate can bring in a solid profit month after month.

If you are feeling unsure about managing a rental property or performing landlord duties, then this article by Dawson Property Management can help you learn what the responsibilities include acquaint you with the property laws in your state.

Evaluate Your Finances

Before deciding to rent out or sell your unit, you need to ask yourself the following:

Can you manage the mortgage payments? Ensure you account for property maintenance costs, operating expenses, costs you need to cover if your rental is unoccupied, and management fees when you plan to hire a property manager.
How much property tax will you be paying? These are fixed payments to the government and over time, these can pile up so you need to consider this factor.
How much is the capital gains tax in your state after selling off your real estate? Knowing this is crucial to compute your end profit or income realistically.

Can you manage to juggle the expenses of two properties, especially if you still need to pay the mortgage each month? Consider the tax benefits you can also get, such as deductions on mortgage, rental expenses, and property taxes when renting your property.
Can you meet the expectations of a landlord role?

What Are the Costs of Selling or Renting A Property?

Making the best decision for you not only requires a clear assessment of where you stand financially, but you also need to be informed about the costs of selling or renting out your property. After learning the payments you need to meet, then you can decide better.

Costs of Renting Out A House

When you own a rental, you can expect to pay the following:

Property management charges, which vary between 5% to 10% of the monthly rental proceeds
Maintenance and repair fees
Property taxes
Insurance premiums
Homeowners Association (HOA) fees
Vacancy expenses
Advertising

If you allow realtors to help you find renters or sellers, then you would also need to pay them a commission for accomplishing this task.

Generally, the commission for finding a real estate buyer is higher than landing tenants. If you choose to be a DIY property manager, you can also add the cost of installing property management software.

Costs of Selling A House

When you sell your property, you need to pay for:

Real estate agent fees
Closing fees
Repairs
Staging
Marketing

You can expect to pay a range of 9% to 10% for the above items from the real estate sale price. Sellers will cover all these costs.

Assessing the Local Housing Market Environment

Before deciding, it pays to evaluate the state of your local housing market, so you are better informed. Check market factor details in your local area, such as rental demand, population, infrastructure projects, and job opportunities.

Rental Demand in Your Neighborhood

To ensure you are making the right decision when it comes to selling or renting your property, you need to research specific factors, such as:

Number of available jobs
New neighborhood developments
Infrastructure improvements
Affluent neighborhoods
Urban areas
University and business districts
Redeveloped neighborhoods

See how much your competitors are charging and know the rate of tenant turnovers when checking into the state of the local housing market.

If you are still unsure of the data you have collected, it is recommended to seek the advice of real estate experts or professional property management companies to gain a fuller understanding of the critical factors you need to evaluate to make the right decision.

Understanding a Seller’s Market From A Buyer’s Market

Before making up your mind to rent out or sell your property, you need to learn the difference between a seller’s market and a buyer’s market.

Seller’s market

Property demand is greater than the number of available real estate
Properties are expected to cost more with more buyers competing to purchase
Sellers have more advantages since they receive a lot of offers from buyers intent on sealing the deal
Some buyers skip property inspections so transactions are faster than usual

Buyer’s market

There are more available properties than the demand for real estate
Property prices are lower and there is less competition for purchasing real estate
Buyers have more advantages since they can negotiate prices
Buyers are more likely to arrange for detailed property inspections

Make sure to review the impact of the interest rates in a seller or buyer market to ensure you make the right choice in selling or renting out your property.

Potential for Home Value Appreciation

Ask yourself if the potential value of the property will increase after some time. If yes, then it is better to refrain from selling it and focus on accepting renters. Check out the type of rental property, its attractiveness to potential tenants, and the demand from the local market.

Bottom Line

It is always best to make a thorough evaluation of the pros and cons of renting out your property or selling it off. You need to assess your finances and consult with real estate experts to ensure your final decision is the best.

Dawson Property Management can help you make the best decision for your rental property, helping you get successful in the rental business.

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