In terms of monetizing your property investment, there are two options – sell it or rent it out. The latter is attractive for those seeking a steady form of passive income.
However, how can you be sure which option is best for your situation? In general, if you want to sell your house fast, then you don’t need to consider renting it out. Conversely, if you are not in any hurry to sell, you can try being a landlord.
Here are some things to consider to come up with the right decision:
Are you moving to a home nearby?
If you are moving to a house that is in the same city, renting out your old home might work well for you.
However, if you are moving to a different city or state, how much profit you might get from renting your home out will be reduced greatly. This is because you will need to hire a property manager to do what you are supposed to be doing as a landlord, such as collect rent, oversee repairs, and maintain your rental property.
Do you have the extra cash needed to start a rental business?
Renting out your home can be lucrative, but it can also be a cash drain. You can’t expect your home to be rented out all the time since people do come and go.
Even if you have an amazing home that you know people will love, downturns in rental demands in your area can affect your incoming cash flow. Maintaining a second home can be expensive if no one is renting it. It can also cost you a lot in repairs, renovations, and refurbishments, especially if your home has already seen better days.
Can you buy a new home without selling the old one?
The usual cycle homeowners follow when they move to a new home is: sell the old home and use the money from the sale to buy a new one.
If you have extra money to buy a new home without selling the old one, you might want to consider renting out the old home for extra monthly income. You might also want to ask your lender for advice on whether it is a good idea for you to maintain two mortgages at the same time and if it will affect your debt ratios.
If you think that renting out isn’t for you after all these considerations, you will have to decide to sell your old home. In doing so, you will have two options – sell to a new homeowner or sell to an investor.
If you decide to sell it the traditional way, you will find that it is not as easy as it seems. There are a lot of things that need to be done when you decide to sell your home outright.
Some of the things you may experience when you choose to sell to another homeowner by yourself instead of to an investor are:
- Getting requests for repairs and refurbishing – Some home buyers will expect you to do some repairs to your old home before they decide to buy it. Even then, the deal is not actually final, and a prospective buyer may still back out after you’ve already spent a great deal of money on fixing up your place.
- Having to wait longer to sell – When you decide to sell to another homeowner and not to a real estate investor, there is a huge chance that you will be waiting longer for your property to get sold. You will need to wait for the right person with the right price offer before you can sell.
- Standing to get lower than your asking price – When selling to another homeowner, you are lucky if you receive what you are actually asking for. Most homeowners tend to lower your offer due to certain repairs that they might have to shoulder themselves or simply because they want a lower price on your home.
- When you decide to sell to an investor, on the other hand, you eliminate all of these worries and even stay in your home while talking to them about selling your property. With an investor, you know exactly how much they are willing to pay for the house off the bat.
- You also get to sell your home quickly; you don’t have to worry about an agent’s commission fees and can leave the home as-is after the deal has been concluded.