How do you know if you should rent out your property?
Many people are looking to move out of the area, and they question whether to sell their property or keep it and rent it out. There are some key things to understand before making such a decision.
Understand Your Expenses
Knowing your expenses is critical before making the decision. You must obviously check your mortgage, property taxes, insurance, and any other expenses you may have, such as any HOA fees. If you have a pool or garden that requires upkeep, account for those costs as well. You really want to understand your exact expense amount.
Test the Rental Market
Once you figure out your expenses, you want to test the market and see what your property can rent for. There are different avenues you can look for in order to find the right tools to help you determine rental amounts. Zillow’s Zestimate is a good tool as well as Craigslist. Just remember with Zestimate that you’re only getting an estimate of rent. It’s probably based on price per square foot, and it’s not completely accurate in comparing properties. Maybe your home has a larger lot or extra amenities. Maybe it’s in better condition than some of the other properties out there. These things will affect your rent price.
You can also reach out to a property management company for help in estimating your rent. Most property management companies can do a free analysis for you. Whether you decide to work with that company or not, at least you have a general idea of what your property can rent for. Always error on the low side when you’re imagining your rental price, because if you end up renting your home for less than you expect, you may be left with expenses you didn’t plan for.
Consider Your Relocation Plans
Think about whether you’ll ever move back to the area. If this is a temporary move and you plan to return to California, you might have a hard time re-entering the real estate market. Huge down payments are required, so if you’re planning to return to the area, keeping your home and renting it out until you get back might be your best option. Ultimately, you may decide you just want to sell the home, but renting it out for a year or two to see how much you can earn and how it goes isn’t a bad idea.
Seek Professional Advice
If you do decide to rent out your home, a property management company can always answer some of the questions you might have. Becoming a landlord can be stressful, especially if you’re out of the area. You need to know the rental laws and how to manage tenants. With a professional property manager, you won’t have to struggle with being a landlord, collecting rent, enforcing a lease, and staying on top of maintenance issues. It’s also a good idea to talk to a CPA or a tax attorney. A lot of the expenses with your rental property will be tax deductible.
If you have any questions about whether renting out your property is right for you, please contact us at Sunburst Property Management.