Should I Sell or Rent My Fixer-Upper? How To Make the Right Choice

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Should I Sell or Rent My Fixer-Upper? How To Make the Right Choice

Real estate investments have incredible potential for yielding passive income, and you want to get the best deal out of your fixer-upper. Once you've updated the kitchen, freshened the paint, and trimmed up the landscaping, there are a couple of different ways to proceed with your renovated property. You can put the home on the market and sell for a profit, or you can become a landlord and retain a stream of steady income through monthly rental payments. Some key considerations can help you decide which is the best option for you.

Do the Math
Use an online calculator to review the possible financial implications of either selling or renting. Take into account the value of the home, the original and existing mortgages, monthly mortgage payment, rate of appreciation, and expected monthly rent. You can move these numbers around and get a good idea of how long you'll need to hold the home before you start making a profit. Think about how either a sale or a rental income would fit into your situation with taxes, income, credit, and capital. Though it's not the only factor to consider, knowledge of financials is an important piece of the puzzle.

Consider the Context
You want to be aware of the market in your area, both for selling and renting. Are prices going up or down? Are larger or smaller homes more popular? What qualities do you see in higher-priced rentals versus higher-priced purchases? In many markets, homes with extra bedrooms and larger lots fetch higher returns when selling, and homes with trendy, new finishes and lower square footage tend toward profitable renting.

The context also includes the condition and original price of the home. Real estate-owned properties are popular options for investors because they've previously failed to sell at auction and are often sold at a steep discount. The real estate professionals at The RE/MAX Northland Team can assist you in the process of purchasing an REO property from a bank or lender, and they can help you get the home appraised and review important factors, such as necessary repairs, location, and nearby amenities. Once you know the context well, the decision of whether to sell or rent out your home should be easier to make.

Know Thyself
Finally, understand the personal implications of either choice. Selling can be a whirlwind of emotions, but it has a definite end date. The capital from one sale can be immediately put into further investments. On the other hand, renting out a property can provide a comfortable monthly income and the promise of future security, but it also adds the stress of becoming a landlord to your life's equation. Hiring landscapers, repair contractors, and even a property manager can help immensely, but you have to decide how much of the income you're comfortable trading. Ultimately, renting may be a great choice if you're interested in becoming a landlord, but it isn't for everyone.

The decision of whether to rent or sell your house should not be taken lightly as it can have a large impact on your life and finances. With the right amount of due diligence, professional advice, and careful planning, you can make the choice that will best suit your lifestyle and provide tremendous returns on your investment.

The experienced real estate pros at RE/MAX Northland specialize in
buying and selling lake homes in Aitkin, Minnesota, and surrounding
lake communities. We know life gets busy ...
... put the POWER of REMAX to work for YOU! 218-203-3603

                                                                                                                        Article compliments of Kristin Louis from parentingwithkris.com