To Rent Or Sell? Decide With This Guide
With Megan Cooper, contributing editor to ILoveMiamiLakes.com
When standing at the crossroads of deciding the fate of a residential property you own, other than your homesteaded property, the question of renting again versus selling is not to be taken lightly, and there are so many factors to consider that it can become overwhelming and confusing. By weighing these considerations carefully, you can make a decision that aligns well with your investment objectives and long-term financial planning.
This article, courtesy of I Love Miami Lakes.com, aims to offer the reader a quick view of some of the pivotal factors that should inform your choice, when considering leasing your residential property. Let’s get started.
Maximizing Property Value
A compelling reason to consider renting your property is the possibility of capitalizing on future market appreciation. For instance, if the neighborhood where your property is located is in high demand, renting for now may allow you to sell the property later at a more favorable price. The strategy here is essentially one of timing—capturing the maximum value by exiting the market when conditions are most favorable.
To learn about what properties are renting or selling for in you neighborhood, give us a call at 786-553-7530 or visit our Home Value Report page. We will promptly provide you with the in formation you need without cost or obligation.
Effective Home Marketing
If your decision leans toward renting, it's imperative to focus on effective marketing, which is an integral component of successful property ownership and management. Think of being a landlord as akin to running a boutique business. Whether you’re starting small with one rental or want to build a company capable of exponential growth, creating a compelling logo can serve as a memorable touchpoint for prospective tenants, allowing you to reach the right audience. Even if you don’t have a background in design, you can make an eye-catching logo by looking for free online tools; this site could be helpful in this regard.
If you don’t have the time or interest to market your rental property, you can always hire us. We are Miami Lakes real estate experts, who can handle all the details for you. To learn more about or services click here.
If you are interested in renting your property on you own, click on the following link to visit our Landlord Advisory page, which has helpful information
Preserving Future Options
Renting can also preserve future possibilities for the property that may not be immediately apparent. Let's say you have some inkling that you might want to move back into this property in a few years, or perhaps make it a family vacation home. Renting keeps these options viable, adding a layer of flexibility to your long-term plans. On the other hand, selling could provide a nice lump sum of cash with which to buy another property in a different location, so you’ll need to think about your options and immediate goals.
Opting to become a landlord with your homesteaded property changes the insurance landscape considerably. Because a standard homeowner's policy may not suffice, you'll need to invest in a more comprehensive policy that covers tenant-related incidents. For instance, a property owner could face a hefty lawsuit if a tenant slipped and fell on the premises. Having the right insurance policy will keep you protected and will give your tenants peace of mind.
If you lean toward selling the property, it's important to take transaction costs for both you and the buyer into account. These include but are not limited to agent commissions, escrow fees, and closing costs, which are typically tax deductible and are roughly 8% of the sales price. These expenses can take a sizable bite out of your profits, something you'd need to factor into your selling price. However, selling a property with an existing mortgage can be advantageous, as the lump sum from the sale can be used to settle the outstanding loan balance.
Enhancing Liquidity and Diversification
Selling your property also turns a typically illiquid asset into ready cash, which you can then redistribute across various investment channels. This liquidity provides the flexibility to diversify your investment portfolio. It's akin to cashing in your chips and scattering your bets more widely across the investment table, and it gives you quite a few options for the future.
The question of whether to rent or sell your home or non-homesteaded property is fraught with complexities, each carrying its own set of financial and strategic implications. By contemplating the factors outlined above, you're well on your way to making a choice that not only makes financial sense but also aligns with your broader life goals. This isn't a decision to rush—take the time to ponder, plan, and then proceed. Your financial future will be better for it.
Jesus M. Fernandez, REALTOR® American Dream Maker, since 1995.
Morris Williams Realty, Inc.