Many accidental landlords, or people who have inherited property, often wonder if they should rent the place out and keep it as an investment, or sell the house. There are financial pros and cons to each, and one of the first things you should do is talk to your tax accountant or financial specialist. You will want to know what the tax consequences are to each option and figure out what is best for you. Another thing to consider is whether you can afford to pay the mortgage on a vacant house. Get the best financial advice you can.
You will also need the advice of a property manager, especially if you are leaning towards renting instead of selling. A property manager can help you determine the market value of your property, so you will know how much rent you can expect to earn. Always work with a property manager who is a member of the National Association of Residential Property Managers (NARPM). This organization comes with a lot of resources and a solid code of ethics.
Next, consider your temperament and whether it is compatible with what is needed to be a landlord. For example, will you be able to handle having tenants damage the sheetrock in your home? Lots of investors see the house as a product; just a thing made from sticks and stones and rocks. If something breaks or gets damaged, they fix it and move on. If you will be emotionally attached to the property and get concerned about everything that might get damaged, you might want to re-consider keeping it as an investment, and sell it instead.
Consider the fact that there is an inherent cost of doing business as a landlord or a property manager. There are repairs that will need to be made on a regular basis. My wife and I have been married for 40 years and we have never broken a toilet. However, each year we replace at least half a dozen toilets for tenants who break them. We don’t always know how these things happen, but when something breaks, as a landlord you have to pay to fix it. Decide if those repairs are in your budget. You don’t want to find yourself sacrificing other things, like family vacations, because you had to spend thousands of dollars repairing an investment property.
If you have any questions on what might be better for you and your property – to rent it out or to sell it – please contact us at Select 1 Realty.