You buy a house, it’s just right and meets all your needs. Then things change. Maybe it’s by choice or maybe your work is forcing you to relocate. Either way, you have the same problem – what to do with the old house when you move to the new one. Far West Property Management in Prescott suggests looking at the option to rent it out.
Here are some things you will want to consider while making your decision.
Do the Math – ask yourself: Will this property produce positive cash flow? In other words, if this property is rented out, and you deduct all of the expenses associated with the property (mortgage, taxes, insurance, utilities, management, vacancy, repairs, HOAs, etc.), will the property produce a monthly profit or a loss? If it’s a monthly profit, you may want to consider renting it out.
Return on Investment – Consider how much you would profit if you sold the property today, assuming you’d lose around 5 – 8 percent to agent fees, closing costs, and other sales expenses. If you would make little or nothing, it may be advantageous to hold onto the property, waiting for the market to improve over time. This is especially true if the property will provide positive cash flow in the meantime.
Get Out Your Crystal Ball – Another important factor to consider when deciding whether to rent or sell your house would be to get out your crystal ball and gaze into the future. What do the next five, ten, twenty years look like for your home’s location? Do you believe things are improving? Is the area growing? If so, the value of your home may increase, so you might want to consider renting it out, especially if it will give you a positive monthly cash flow.
Owning two homes can actually work and be profitable if you decide to rent out the previous home. By keeping the house, you can begin building wealth through cash flow and equity. But sometimes you need professional help to manage the property, especially if you will be living out of the area.
Just because you own rental properties does not mean you have to be the person dealing with the tenants. Professional property management companies, like Far West Realty in Prescott, can cut the stress of rental property ownership down to a minimum. To talk to one of our property management specialists, just give us a call at 928-772-9400 and let’s tal