So you’ve just finished renovating your very first property. Now, it’s time to decide if you’ll keep it as an ongoing rental or flip it for a one-time profit. The decision isn’t always easy, but the following tips from the Corcoran Group can be a big help.
One of the first things you have to consider is whether or not you have the time to become a property manager/landlord right off the bat. According to The Property Management Coach, there’s a lot that goes into it, including pricing, taking photos, showing, and handling paperwork and applications. All of this takes time to learn and do.
Before you make a decision, think about your goals. Do you want to have a portfolio of properties for rent? If so, do you have the money to invest in other homes or is it all tied up into this one? Once you know your desired outcome, you can decide if it makes the most sense to have a small amount of money coming in each month or to take the profits and invest in more properties.
If you ultimately go the rental route, you have to market your property. Social media is usually the best option for those, especially if you’re on a budget. Fortunately, you can design banners online with this free template. You can then share your marketing imagery on your Facebook, Instagram, Twitter, or other social sites. It’s easy to find a banner that will work with your brand, and it does not take long to add elements (including images, videos, and animations) that give your property a bit of personality.
Is your property really ready for rent? Before you post an ad, it might help to hire a property inspector for a final walk-through. Bankrate explains that this may cost you an average of $400, but it’s a small price to pay for peace of mind. This way, you’ll get a better idea if there’s any damage that needs to be fixed before you take on a tenant or list it for sale. If you have broken windows, for example, this will give you time to contact a window repair company or two to get quotes – window repair averages $650 per window, so make sure to get at least two quotes, read online reviews, and check their licenses and referrals.
When you choose to sell, you’ll need to know how much you can expect to get out of your property. For this, you’ll have to know how much equity you have in it. As Merrill Lynch explains, your home-equity amount will change based on the market. But, a good way to know about what you can expect is to take your appraised value minus your current mortgage balance. You’ll also need to count any real estate and other fees that you’ll have to pay out-of-pocket to make the sale happen.
Pricing A Rental
Before you choose to sell based on equity, you should also pay close attention to how much you can expect to pull in each month from renting. This depends on the property’s value, local rent prices, and demand. You’ll also need to factor in your ongoing expenses, including your mortgage and HOA fees, and whether or not your property has features, such as a swimming pool, that might make it lease for more than similar homes.
Ultimately, the decision to sell your fixer-upper or turn it into a recurring income property depends on your personal goals. But, no matter what you choose to do, make sure that you understand marketing, including how to establish a functional social media presence. You also need to get your calculator and decide if a lump sum is your better option.