Investing in property can be a great way to build wealth over the long term. But, it can be difficult to know whether or not to keep renting your property. On one hand, owning a property gives you stability and security, and it can also generate passive income.
However, with the market fluctuations, you might be thinking about whether you should continue renting your apartment or selling it. This decision is critical and can get confusing. Below, you will find 4 tips to help you make an informed decision about whether you should keep renting your property or sell it.
1. Financial Considerations
One of the key factors to consider when deciding whether to sell or keep renting a property is the financial aspect. This includes the potential sale price of the property, as well as the amount of money to be made from renting it out. If you sell the property at a higher price than what you paid for it, you can realize a profit, which can be a significant financial gain. However, as a landlord, you can also receive a regular rental income, which can be a reliable source of passive income.
Compare the costs of owning the property, including mortgage payments, property taxes, insurance, and maintenance costs to the potential rental income to determine which option is more financially advantageous.
Additionally, it is important to consider the seasons in your calculations, especially if you are renting a room or entire apartment on a short-term basis. For instance, if your apartment is located in a prime touristic location and it’s a high season, keep in mind the possibility of increasing rent during that time and calculate accordingly.
2. Market Conditions
The real estate market can play a big role in determining whether it’s better to sell or keep renting your property. Consider factors such as the current market trends, demand for rental properties in your area, and the supply of similar properties in the same area.
Keep in mind that rental income is affected by market fluctuations and economic conditions. This makes it a less predictable source of income compared to selling. The sold property provides liquidity, and you can use the proceeds from the sale for other investments or expenses.
3. Future Plans
Think about your long-term plans and what you want to do with the property. If you’re planning to move or retire in the near future, it may be more advantageous to sell rather than keep renting your property. While rent money is considered a passive income, management responsibilities such as finding and screening tenants, collecting rent, and handling maintenance and repair issues can be tiring.
On the other hand, if you’re planning to keep the property as a long-term investment, it may make more sense to keep renting your property. Obviously, once you sell your property, you no longer have any control over it. Any future profits or appreciation will accrue to the new owner. Therefore, you need to research properly before you make the decision to avoid any future regrets.
4. Personal Factors
Finally, consider your own personal situation and preferences. If you no longer want to be a landlord and deal with the responsibilities that come with it, then selling the property makes more sense. These responsibilities include leasing, posting the property, looking for tenants, and looking for good realtors. Then, you can use that money to invest elsewhere.
However, if you enjoy the process, then keep it until you find the perfect opportunity to sell it. Property management software like RentRedi is an excellent way to manage your properties efficiently. All aspects of owning rental properties can be streamlined with tech. You can collect rent and manage your business from one dashboard. You can also screen tenants, list units, sign leases, and manage maintenance.
To Sell or Keep Renting Your Property?
Remember that this decision is not a small one to make. So, it’s a good idea to seek advice from a real estate professional or a financial advisor to help you weigh the pros and cons of each option and make the best decision for your situation. Ultimately, your conclusion will depend on your personal circumstances and financial goals. Therefore, consider all the pros and cons and potentially seek professional advice before deciding.