Considering Renting Out
Renting is always the fallback consideration, “If I don’t sell I’ll rent it out!”, and yet it is most frequently the WRONG decision, and here is why.
Here are some assumption you may be making:
- You will rent until the market price rises to give you the price you want
- You will have the place rented at the price YOU want
- Your property will be rented 100% of the time
- The rental income minus expenses will at least cover the monthly cost
Here is the reality:
- If we assume the most positive outlook for growth, (a 3% annual appreciation), it will take years at best until the market gives you the selling price you want today. By then the market will have risen and you are then going say you want even more. The price you want will constantly be just beyond what the current market will pay for.
- If you are going to rent you will compete with everyone else in the market doing the same. That means you will have to compete on price and accept the rent that the market is willing to give you, which I guarantee is much much lower than what you want. So in the end you will accept that lower rent and set yourself up for a monthly loss. The association rules alone will restrict you from renting at the frequency or time period that you would need to cover costs.
- If you don’t end up accepting that lower rent, you will instead continue trying to find someone who will rent at YOUR price. That scenario leads to an even larger loss from carrying an un-rented apartment month after month after month, paying taxes, insurance, homeowners fees, mortgage, utilities etc.
The truth is that you likely didn’t buy the property with the intention of renting, and when you consider the costs, aggravation, and how much you will actually net, (take home), the calculation unfortunately can’t possibly make sense.
Some owners get so frustrated that they decide to give the property to their children or siblings. These family members, because of a lack of interest, commitment, and resources, allow the place to deteriorate and accumulate fines and liens to the point at which it will eventually have to be sold at a fire-sale price. (its like giving someone a puppy who was never prepared for caring for it)
|Taking a loss is hard to take. But avoiding a loss can be much worse.|
We have seen owners stubbornly continue this frustrating process year after year until they ultimately get fed up and call us to sell their place for what the market is actually willing to pay for. Below please find some information that will be useful in your determining the best course of action.
Get in touch with us today so that we can discuss your particular concerns and timeline.