If a person is considering selling his home or renting it, which should he choose? Well, the answer to that is dependent upon many factors, such as how much equity the person has in the home, what his financial situation is like, where the market is, etc.
There are also factors that people might be unaware of that could sway their decision. Today we will look at some of those.
First, I want to share some of my experiences with renting. My husband and I rented out a home we owned for many years. We were leaving the area and the market had burst, so we knew holding on to the house was the wisest choice for us at that time.
Renting a home is definitely not an easy task–and we had property managers helping us. Some of the stories we dealt with included a tenant wanting us to pay for his frozen meat (yes I did just write that) that went bad due to a power outage, same tenant was upset that he couldn’t plug in his Christmas lights (been there done that ourselves when we were renting–we ran an extension cord out the front window to solve the problem), and, well, I could go on…
There are certainly challenges that come up when renting, especially when you live out of state. Not all property managers are equal. We had one that never contacted us when there was an A/C issue. Somehow the tenants got a hold of our number and called us. They were very upset because it was hot in the house and they had been living like that for days. We felt so bad (and of course immediately called an A/C company).
After many growing pains, we finally were fortunate to get a property manager who communicated with us. That is so key and things went nice and smoothly from there.
So with that said, was it worth it to go through with renting the house? The answer for us was yes. While we certainly didn’t make much when we sold it (because you’ll remember from our discussions of where housing prices are right now compared to the bubble, we are below the 2006 peak), we did not lose money, and that was because we waited for the recovery period.
We are in that period now. So there may be many potential sellers who would benefit from selling now versus renting. However, if someone is considering the rental route, he or she definitely should be aware of what’s involved.
Here are 10 questions to ask yourself to help determine if renting is the right option for you. These come courtesy of the KCM Blog:
10 Questions to Ask BEFORE Renting Your Home:
1.) 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).
2.) Because of the economy, many homeowners can no longer make their mortgage payment. What percent of tenants do you think can no longer afford to pay their rent?
3.) Have you interviewed a few experienced eviction attorneys in case a challenge does arise?
4.) Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?
5.) Will you allow pets? Cats? Dogs? How big a dog?
6.) How will you actually collect the rent? By mail? In person?
7.) Repairs are part of being a landlord. Who will take tenant calls when necessary repairs arise?
8.) Do you have a list of craftspeople readily available to handle these repairs?
9.) How often will you do a physical inspection of the property?
10.) Will you alert your current neighbors that you are renting the house?
As you can see, there are many things to consider if you are thinking of renting your home.