Sell or Rent Your Real Estate?
Right now, the housing market is less than perfect. This is known knowledge. However, what if you are sitting on some real estate you no longer need to own? Do you sell and take your chances in the market, possibly losing money? Or do you become a landlord and rent the property out until the market comes up and you can sell for a good price?
If you decided on renting the property out, keep in mind that it is not a perfect business venture. For every up side, there is a down side, and rental real estate is no different.
First on the list is worry about liability issues. With the increase in frivolous lawsuits, liability can be a scary thing. Providing someone with shelter in return for money puts you and the tenant in a relationship where both parties bear responsibility. You have to be certain that the property you are renting out meets all government codes.
It is impossible to prepare for every expense related to owning rental property, so there are bound to be some unexpected ones. Things such as boilers, plumbing and fixtures often need to be replaced and are not prohibitively expensive. However, faulty wiring, bad foundations, compromised roofing and the like can be very expensive to repair. If you can’t find a way to pay for repairs, you will be left without a tenant and with the grim prospect of selling the property at a significant discount. Also, as building codes evolve over time, lead paint, asbestos, cedar roofing tiles and other materials that passed inspection in the past may be reevaluated to your disadvantage.
You will also want to consider who you rent out to. Bad tenants or no tenants can cost you a lot in the long run. So, be diligent and be careful. Make sure it’s worth the cost to you before you either rent or sell.
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