Once you've settled into your “forever home," it might not be the last home you love:
- You might find a newer, better, or more updated “forever” home.
- You might lose your job and be unable to afford the mortgage of your home.
- You might face relocation due to your job or education.
In the face of these sudden changes, you might consider renting out your property for additional income or selling your home to be rid of the responsibility. These are decisions that should be made carefully and involve research and deliberation. If you've ever been curious about whether renting your Richmond home might be right for you and where it stacks up when compared to selling your home outright, read on!
There's More Than One Benefit to Renting
Renting your home can be an excellent source of extra income: as long as your rent is set higher than your mortgage cost and any maintenance costs that come with your home, you will make a profit! Make sure that you are researching the rental market in your area and that you are setting a fair rental rate for your home: if you set your rate too high, you will miss out on potential renters, too low, and you'll miss out on profit. If the housing market is down when you are trying to make your decision, it might be better for you to rent out your home until the market recovers, then you can sell for more!
One of the biggest perks of renting out your home is that you still have a home in the future if you change your mind. If you relocate for a job opportunity, and it doesn’t pan out the way you planned, once your current lease term is up with your renter, you can move back into your property.
Managing Your New Rental Alone Can Be Challenging
A vacancy is the most significant negative when it comes to potentially renting out your home: without proper listings and marketing, tenants may miss out on your rental property. While you aren’t making rental income from your Richmond home, you will still be the one making payments on your mortgage. If you do not have a steady supply of rental income, you will also be on the line for any utility bills—even if you're not currently occupying the property.
Tenant damages are also an issue with renting your home: you are trusting that someone else will care for your property as you would, and you are responsible for repairing any damages that consist of normal wear-and-tear. Substantial damages may be covered by a security deposit, and sure, you might be able to do some of the repairs yourself—but the "big jobs" usually require a contractor, and that means labor costs.
A Quick Sale Might Be Better, Depending on the Market
If the housing market is a “seller’s market," then selling might look like a great option. If your market is competitive, or you’re in a trendy or urban neighborhood, selling might be the best option for you as well. A 'seller’s market" is when more people are looking to buy homes than there are homes on the market: this situation allows sellers to negotiate higher prices and better offers for their homes.
Selling your home also means that your debt-to-income ratio on your credit report will be lower: if you are mortgaging two houses—even if one is a rental—it still counts as debt. If a tenant loses their job and you require their rental income to meet your mortgage, you might end up with a ding to your payment history. Late payment history can negatively affect your credit score with the three major credit bureaus.
A Sale Might Not Be Easier, Either
Selling a home can be one of the most stressful life events that people manage: if the market is down when you list your home, it could sit on the market for months—if not longer. If you have already closed on a new house, you might be making two mortgage payments without the help of rental income.
There is also the task of finding a realtor, setting a fair market price for your home, and advertising the property. Finding a realtor can be tricky since there can be many conflicting personalities at work. You also want to find someone that is going to correctly price your home; the price must be desirable to both you and the potential buyer.
A Property Manager Can Bridge the Gap
Selling or renting your home can be an incredibly difficult decision to make, and both can end up being either profitable or costly. Success with either choice is going to depend significantly on the market rates in Richmond, and knowing the market is second nature for a property management company. They also know how to write compelling and eye-catching listings and market your home to potential renters so that you don't have to! If you are considering selling your home, and you're curious about how much it might be worth as a rental before you commit, contact us for a free consultation!