For those with homes on the real estate sales market, nothing is quite as frustrating as watching it sit for months or even years with minimal traffic and no viable offers. If you're currently in this situation, it may be time to consider some alternative options for your property.
One of the best alternatives you can consider is putting the home on the long-term rental market. While this could sound counterintuitive as you may ultimately want to get rid of the home, putting it on the rental market can generate income while allowing time for you to make some decisions or wait for the sales market to improve. Here are 3 of the top reasons putting your property on the rental market may be the best option for you.
1. Renting Can Allow Time for the Sales Market to Improve
If your home is appropriately priced, upgraded, in a desirable location and has all the other things buyers look for but still isn't moving, the problem may simply be timing - the market isn't working in your favor right now. Unfortunately, there isn't much to be done about that but wait it out. However, putting your home on the rental market while waiting for the sales market to improve can offer many advantages to homeowners.
Having tenants in your home paying monthly rent will generate income that will help cover your mortgage and other expenses or, if your home is paid off, put extra cash in your pocket. Typical long-term leases run for twelve months, giving you an opportunity at the end of the lease term to reevaluate your decision and determine whether the sales market has improved or if it would be favorable to continue in the long-term rental market.
Renting is also an excellent option for homeowners if the current sales market isn't supporting the sales price they'd like to get for their home. If the market in your area is indicating that it will improve in the coming years, it may be in your best interest to wait on selling and rent the home out until market conditions will allow for it to be sold for the price you need.
2. Are you Moving but Plan to Return to the Area?
Another scenario in which renting out your home has the advantage over selling is if you're moving away from the area but would eventually like to return. If a job transfer, military orders or family situation is taking you away from your primary home but you aren't ready to permanently let it go, the long-term rental market is a fantastic option. Being forced to quickly put your home on the sales market in this scenario leaves you little time to consider the condition of the market.
However, if you choose to put the home on the rental market and hire a professional property management company, you will have properly screened tenants in the home paying you monthly rent to help cover your mortgage. Not only will you have the extra income, but you'll have people living in the home and caring for it versus potentially leaving it sitting vacant for months or years on end. Plus, if you choose to work with a local professional property management company, you'll have the added advantage of having professionals keeping an eye on your home and ensuring that all maintenance issues are quickly and properly addressed, relieving you of any extra stress.
3. Financial Advantages of Renting
There are financial advantages to renting out your home versus selling it at an inopportune time as well. There is, of course, the obvious advantage of having the tenant's monthly rent cover some or all of your mortgage, but there are also attractive tax advantages for landlords. Expenses associated with rental properties (while they're occupied) can be written off. This includes maintenance costs, upgrades and repairs, and even professional services in some instances. Not only that, but with rental properties you can also claim deductions for depreciation. It is, of course, always advisable to discuss your tax options with a CPA or other tax professional.
Another point to consider is that if you did sell your house today, how much profit would you really make? With sales, there are closing costs, commissions, taxes and attorney’s fees to keep in mind. If you crunch the numbers and find that your profit would be minimal, nonexistent or perhaps you'd owe money, it would likely be in your best interest to wait on selling. In the meantime, owning a rental property will diversify your investments and typically generate a greater cash flow than other types of investments.
Overall, entering the rental market is a relatively quick and easy way to begin generating income on a property that isn't moving on the sales market. Also, it doesn't involve a long-term commitment as homeowners have the opportunity to reevaluate their decision each time a tenant's lease ends. Or, perhaps once entering the rental market, homeowners may see the advantages to owning investment properties and decide to go this route for the long-term.
If you would like to learn more about putting your home on the rental market and how that might ease the burden of having a home that isn't selling, please reach out to the experts at Sweyer Property Management today. Our new business team is greatly experienced in assisting property owners transitioning into the rental market and can provide you with a no-obligation home assessment and rental evaluation.