Should You Sell or Rent Your Home?
A surprising number of homeowners find themselves owning a second home, often not by design. Perhaps they’ve had difficulties selling a home after moving to a new home, due to difficult market conditions, or current prices for homes mean taking a serious loss by selling it. Often, they’ve inherited a home when parents have passed on. Occasionally, the second home is a vacation home or lake home that just isn’t being used any longer. Deciding what to do with an unneeded second home can be a tough decision. Should you sell the home in the current market, become a landlord and rent it out, or rent it out until market conditions improve?
Andrew Magnuson – Andrew grew up in small-town Lindstrom as the 3rd of 4 siblings. He went to college in St. Paul before deciding to develop his own brand through self-directed Leadership Education. He has also developed his personal network across the greater twin cities area through church and social functions. He currently lives in Eagan and works out of the REMAX Advantage Plus Office in Eagan, MN. Customers can expect Andrew to be on top of each step of the Real Estate process and ahead of the curve when it comes to listings or showings, including effective communication, honesty, and high quality customer service. Phone 763-221-0596
Here are some of the factors that come into play with each choice:
- Sell the Extra Home – This option is attractive to many owners who find themselves dealing with a home they’re not using. In the case of inheritance or longtime ownership, the home may be completely paid off. Selling it can provide a sizable sum that can be used for other purposes or distributed among the heirs. Still, preparing such a home for sale at the best possible price may take a lot of work, especially if it’s not located near your primary residence. If the home has an existing mortgage loan, selling it can end that obligation and may result in a cash balance, and the end of monthly payments. If the home’s mortgage balance is higher than the value of the home, a short sale may help remove that liability.
- Rent the Home and Become a Landlord – This option has many advantages. Owning real estate means owning property that can add to your long-term wealth. If the property is free of mortgages, the rental income will produce a positive cash flow for you. If there is a mortgage, rental income may cover the mortgage payments or even more. Today, rental rates are up, and demand for home rentals here in the Twin Cities is up too. On the down side, if the home needs rehabilitating before it can be rented, which is not an uncommon situation, the costs of that rehabilitation must be considered in your decision. Being a landlord also comes with responsibilities, although professional property management can help, but at a fee. If being a landlord has no appeal for you, and you’d rather not go to the expense of expensive rehabilitation costs, selling the home “as-is” to a real estate investor who will do the rehabilitation and rent the home as part of a portfolio of rental properties may be a solution.
- Rent It Until the Housing Market Improves – In a sense, this is a similar choice to renting out your home as a landlord, with many of the advantages and disadvantages described above. The goal, however, is different. Planning for a sale when the value of your home reaches a more desirable level lets you anticipate your future plans, while generating cash flow in the meantime. Coming to one of our Investment Property 101 seminars will help you understand more about this possibility, and you can get the answers to many of your questions.
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