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(English) Should I Rent My House If I Can’t Sell It?

(English) Should I Rent My House If I Can’t Sell It?

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9 comentarios
  1. Ruthmarie
    Ruthmarie Dice:

    Being a landlord is difficult. My mother was a landlord and I said «never.» But some of this seems contrived to «scare» potential sellers into locking in losses rather than do what is truly in their best interests. Three of your 10 points are essentially on the same issue and then another two points were on the same issue and #10 was a throwaway. WE make more money if they sell, but that might not be what is best for the seller. I have a home that I’m struggling to stay in. Bottom line, too much of my financial security is at stake to sell at a severe loss. I will probably have to rent it. But I notice other agents trying to get me to sell in order to pry loose inventory. Not happening if its in my best interests to do otherwise.

    Responder
    • Steve Harney
      Steve Harney Dice:

      Hi Ruthmarie,

      We would never suggest any real estate agent not work in the best interest of their seller. We just believe that all buyers and sellers should make informed decisions. With the rental market as strong as it is, it may seem rather easy for a seller to rent their home. We just want them to consider all aspects before making a decision.

      As far as ‘scare’ tatics, fear is created by a lack of knowledge not too much knowledge. This blog is dedicated to remove any fear by discussing all aspects of a decision.

      P.S. Which of our ten questions do you think a homeowner should not answer before deciding to rent their home?

      Responder
  2. Ann
    Ann Dice:

    Assuming there is a mortgage on the property, my first question would be to myself… «Do I have enough reserve to make this payment (along with my other obligations) if my tenant defaults?» It can take months to evict and find another suitable tenant. Which is better in the long run….take a financial hit by selling at a loss or risk losing everything because you didn’t have enough money to carry it without the rental income?

    Responder
  3. Cynthia Landis
    Cynthia Landis Dice:

    You forgot another important facet regarding renting: will the tenant permit showing of the home 60 to 90 days prior to the expiration of their lease? Will they be cooperative when it comes to showings from the timing of appointments to the staging of the house? How will a tenant’s furnishings look in the home? Even if the market appreciates, a bad tenant can ruin a small financial gain if they are uncooperative or worse, slovenly.

    Responder
  4. Graig Griffin, SIOR
    Graig Griffin, SIOR Dice:

    CAUTION: From a purely practical standpoint, this is a great checklist. However it misses two major points:

    – Is renting able to get a rate of return (including a factoring of risk) at least similar to other investment vehicles? AND

    – Are the income tax ramifications going to work in the owner’s favor?

    Without knowing these elements, even a home that seems like a great rental can easily be a total loser when costs of ownership (taxes and insurance), costs of renting (upkeep, capital repairs, accounting, legal, additional insurance), linear cost recovery ramifications (depreciation), and owner’s personal time (at some realistic cost per hour) are factored in.

    Other elements worthy of consideration are:

    – Reduced credit score/borrowing ability if the property has mortgage(s)

    – Market trajectory (prices increasing, static, or decreasing)

    – Home factors such as functional and aesthetic obsolescence

    – Occupancy rights of tenants (what if they NEED to sell later but have a lease in place?)

    Owners need to know that even though it’s a home, the instant you convert it to a rental – it’s investment (commercial) real estate and the skill set to determine worthiness and REAL cost income is vastly different. Agents need to remember that too, and make sure they are properly trained before ever giving advice on converting a home to a rental – the liability is massive.

    Responder

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