You’re buying a new home. What do you do with your current home? Either renting it out or selling it could be profitable, and it isn’t easy deciding which option is best.
At MarketPro Homebuyers, we buy houses in Maryland, Virginia, Washington, D.C., and Pennsylvania. We’re experts in this area, and we put together this list of questions that will help you decide if you should rent out your house or sell it.
Question 1: Do you want to be a landlord?
Start with this question, because if you don’t want to be a landlord then the details of the property and finances don’t matter. If you don’t want to be a landlord, you’ll end up resenting the stress and work that comes with having a rental property, even if it’s bringing in money monthly. If you do like the idea of being a landlord, make sure you’re ok with the financial risk involved.
Question 2: Do you have enough time, money, and skills?
Being a landlord requires a significant investment of your time and money. Skills are important, too—if you can make a lot of repairs yourself, you won’t have to cut into your profit by hiring professionals frequently. If you don’t have the specific skillset needed to make repairs, you’ll have to factor that into your financials. If you don’t have the time to deal with finding tenants, you’ll need to hire a management company. Finally, make sure you have enough cash to cover all the property expenses in the case of a vacancy.
Question 3: What’s the condition of your home?
The best properties to rent out are newer and in good condition. If you have an older home that constantly needs money put into it to keep it in good repair, it’s probably not worth renting out. An older home with the original roof and appliances, for example, will likely need costly repairs and updates in the near future. This will significantly cut into your cashflow and overall profits. Read more on when to get rid of your rental property.
Question 4: How appealing is your home to renters?
How much demand is there for rental units in your area? Is your home in an appealing location? For smaller condos or apartments, this might mean being close to city jobs and public transportation. For larger family homes, a quiet neighborhood with parks and good schools is likely to be a hot rental. Think about what amenities inside the house most tenants would want to see. Before you decide to make your home a rental, you should be pretty confident that it won’t be difficult to find tenants.
Question 5: What are the monthly financials?
Figure out what your home would likely bring in monthly as a rental. Once you deduct all the expenses you’ll need to pay, can you expect a monthly profit? Don’t just think of the mortgage, taxes, and insurance; make sure you account for repairs and occasional vacancies between renters. If you’re using a management company, factor that in.
Question 6: What are the long-term financials?
After you figure out your anticipated monthly profit from keeping your home as a rental, compare that to what you could make by selling. This is not a simple comparison; you have to factor in future appreciation and make some predictions about your local real estate market. Don’t forget to account for taxes—if you sell a rental property, the tax implications are much different than when you sell your personal home.
Making the decision:
If you want to be a landlord and have the time, money, and skills to be successful, it can be a great way to build wealth. With the right property, the monthly cashflow and increasing equity can be worth the stress.
If any of these factors are not in your favor, though, it might make sense to sell. If you’ve decided renting out your home is not for you, we’re here to help.
Work with MarketPro:
At MarketPro Homebuyers, we buy houses in Maryland, Virginia, Pennsylvania, and Washington, D.C. We’ll give you a fast and fair cash offer for your current home just as it is now; no repairs, no inspection, no commissions or fees. You can even choose your exact closing date to coordinate perfectly with the purchase of your new home. Our team will walk you through your quote, including a review of what your home would likely bring on the open market.
If you’re in our service areas, we’d love to show you how easy and stress-free the sales process can be. Contact us today for a no-pressure quote.