Wednesday, June 19, 2013

Sell or Rent?

It looks like my tenants may be leaving in a few months, which means I have some decisions to make. Should I try to find new tenants and rent the place again? If so, should I rent it furnished again, or clear out my stuff? Should I sell my furniture or put it in storage? The same question would apply if I decide to put my apartment on the market for sale. The real estate vibe has been fairly positive lately, so I could be catching a good moment-- who knows when things might crash again! Should I use a real estate agent or try a for-sale-by-owner?  And if I did sell, how would I invest the proceeds? That would really change the balance of my overall net worth portfolio and putting it all into mutual funds could make me a lot more vulnerable to market swings. 

Time to put on my thinking cap... All suggestions are welcome!


ND Chic said...

I would try to to sell it yourself if you decide to go that route. Its hard to say of its worth it to rent it out again or if you should sell now.

Terry Pratt said...

We now have a better idea of when the Fed will back off on Quantitative Easing, so we also have a better idea of when mortgage interest rates will rise.

The rental market is strong now, and people renting at the time interest rates rise will probably continue to rent for quite a while, because higher interest rates will continue to price them out of purchase for some time.

So unless there is a massive influx of new homebuyers in the next year or two, I think market conditions will be favorable to landlords for quite a while.

Anonymous said...

For me, I think the starting point would be to reflect on how the landlording experience has gone for you to date. How were your tenants? Were they good, and if so, how hard was it to find them? How long did they stay? How much would it cost you (in time vacant, listing, showing, etc.) to re-rent? You had mentioned previously that you wondered if you had perhaps underpriced your place. Could you recoup some of the costs of re-renting by raising your rental price?

May I share with you what my landlord does? He has been a landlord for at least a couple of decades, but he's now reaching retirement age and I think we are his last-but-one tenants (his last ones will be the ones in the house next door to his!). He works out what the "fair market rental" is for the neighbourhood and then undercuts it by 10-25%, depending. This way he has lots of applicants from whom to choose, and can really decide who he most wants in his properties long-term. He's a cost-conscious guy, so this low-turnover, least-hassle strategy must make economic sense to him. Granted, we knew him prior to becoming his tenants; but even so, our rent is completely reasonable, and he's only raised it once so far in 9 years, by $50.

All of which is to say, reflect on it and assess what has worked for you, what hasn't, and whether landlording will continue to make sense for you in the near-to-mid future! (If plans to move to Florence or Paris are in your future... maybe not so much.)

All the best!

Your Daily Finance said...

I would ask are you making money from the rent and how much problems did you run into with the previous renters? If you like renting and the steady income rent. But if you can get a good amount from selling it and you need the money for something try selling. Either way good luck with the decision you make.



Taylor said...

Hi! Love your blog and really wish you would post more often. Your finances are fascinating and it's really neat to hear how you make decisions based on living in "the" big city.

I am a landlord. I am 34 now, and bought my first investment property when I was 24. I have 8 properties now and cannot imagine a financial life without them. They are work (what isn't?) and tenants can be dramatic if you don't choose them carefully, but real estate is a very good way to build wealth without massive amounts of work. I would encourage you to hang on to it for awhile longer. And, one day when you are hoping to travel, the rental income will be a handy way to pay for the plane ticket...

Anonymous said...

I read this belatedly. In case you have not decided, I think if you don't mind being minor landlord, I would stick with renting. I know things are going well with Sweetie and that's super, but it's always good to have option to be independent if needed.