Because I do a lot of business in the second home market, I’m often asked about renting vs selling. Just like much of Sarasota real estate, there is no simple answer. Currently, the inventory remains low and therefore, most any well priced home on the market should have consistent showings. Buyers are smart and not willing to spend more than a house is worth, so the market value of homes has remained somewhat flat.
If renting vs selling has you in a conundrum, let me offer these pros and cons to consider from The KCM Blog. In addition, you need to consider what the tax ramifications might be and if you should use a property management company.
There has been a lot written about how buying a home is less expensive than renting one in many parts of the country. Rents are skyrocketing and homes are at bargain prices. These two situations are also causing some sellers to consider renting their home instead of selling it. After all, they can get great rental income now and perhaps wait until house values increase in the future before selling.
This logic makes sense in some cases. We at KCM believe strongly that residential real estate is a great investment right now. However, there is a huge difference between deciding you want to become an investor (and landlord) and deciding that renting your primary residence might be ‘easier’ than trying to sell it.
Here are some questions every potential landlord should consider:
10 Questions to Ask BEFORE Renting Your Home
- How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
- Because of the economy, over ten percent of homeowners can no longer make their mortgage payment. What percent of tenants do you think can no longer afford to pay their rent?
- Have you interviewed a few experienced eviction attorneys in case a challenge does arise?
- Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
- Will you allow pets? Cats? Dogs? How big a dog?
- How will you actually collect the rent? By mail? In person?
- Repairs are part of being a landlord. Who will take tenant calls when necessary repairs arise?
- Do you have a list of craftspeople readily available to handle these repairs?
- How often will you do a physical inspection of the property?
- Will you alert your current neighbors that you are renting the house?