Kevin Canterbury is the Founder and Managing Director of Redstone Capital Management in Arizona. As a financial planner and advisor, Canterbury is often asked about what to do with residential property in changing market conditions. Below, Kevin lays out some considerations for people wondering if it’s time to rent or sell.
Whether life has presented you with the need to upsize or downsize your current home, or if you suddenly find yourself required to move for work, the question will arise: is it better to sell outright, or keep the property and rent it?
But knowing when to leap into becoming a landlord or selling and moving on can be difficult. Kevin Canterbury of Arizona lists some details to consider when evaluating if renting or selling is the better choice for you.
Why You Should Rent Your House
There are many reasons someone may want to become a landlord, according to Kevin Canterbury. Perhaps you’ve always wanted to become a landlord since you like that It comes with many perks such as having passive income and additional income streams. Another reason may be that you owe more for the house than its current value.
In addition to these common reasons to become a landlord, let’s take a closer look at some lesser-known reasons.
The Demand for Rental Properties Is High
The demand for rentals is simply not the same across the United States. Depending on your state, city, or even block, the demand for rentals may be higher than in other areas.
For example, if you live a block away from a college campus, you could be sitting in a dream home for students. If the demand for rental properties is particularly high in your area, then renting your property could be well worth the time and investment.
Renting out a house in a high-demand area means that you’re far less likely to ever wait out vacancies, and you’ll have your pick of renters. Compare this to an area where few are looking to buy, and you may be tempted to lax criteria for renters just to end a long vacancy.
You Want to Return to the House
Some properties are worth holding onto, explains Kevin Canterbury. If you have a job that takes you across the country, but you have every intention of returning to your former city, then selling a house only to come back and buy later may not be the right choice.
Renting out your home allows you to keep the property while earning a profit. And when you’re ready to truly make it your own again, it’s just a matter of waiting out a lease rather than starting over as a buyer.
You Can Profit
Perhaps your home has beautiful amenities that would attract any potential renter. Add to it that you could charge a reasonable rate for rent that would still turn a good profit. These are signs to rent, according to Kevin Canterbury of Arizona.
Some homes simply aren’t worth what a landlord would need to charge in rent to turn a profit. But if you see local rental homes that are similar to yours and their prices would mean a profit for you even after the mortgage, insurance, and maintenance costs, then you have a great rental property on your hands.
Why You Should Sell Your House
Being a landlord isn’t for everyone. If being a landlord to you is completely unappealing, then selling is the best choice for you. But if you’re on the fence about whether to rent or sell, here are some reasons you should sell your home.
Housing Prices are High
Housing prices across the country are very high right now. That means that your house is probably at its most valuable. There’s no better time to capitalize on the opportunity to sell a house than when the market is hot.
You’re Ready to Profit Rather than Invest
Becoming a landlord isn’t free. You may already have the house, but you still need to pay the mortgage, insurance fees, taxes, and maintenance costs. This is particularly high if you have a vacancy for any amount of time. This means you need money on hand until rental checks start coming in.
Renting out a property is an investment of time and money. If you’re ready to earn a profit rather than liquidate cash for an investment into a rental, then selling could be better for your current situation.
The House Is Difficult to Maintain
Some houses don’t need much maintenance and are a dream for renters and landlords. But if your property is older and requires frequent fixing up and maintenance, this may not be right as a rental. Not only will this require a lot of time and money on your part, but it will be an inconvenience to the renter.
If your house isn’t in a condition to be rented, or you’re not ready to put a lot of time and money into a house you don’t live in, it’s time to sell.
Conclusion – Renting or Selling
Once you’ve weighed the pros and cons of selling and renting, it’s time for you to make your decision. The good news is that you can always change your mind if you feel like you’ve made the wrong choice. You can sell what was a rental home or buy a house to rent it out if you truly want to be a landlord.
Consider the current state of your finances, explains Kevin Canterbury. Decide what you’re willing to put into a rental house, and your willingness to manage the property yourself or outsource the management to someone else. These factors will generally give you the best idea of whether you’re ready to become a landlord or if you should take your profits and go.