Looking to Sell Your Home? Become a Landlord Instead!

When a person owns a home and decides that it’s time to upgrade or relocate to another area, they have a big decision to make. Should they sell their old home or turn it into a rental property? To answer that question, it’s important to analyze all of the factors that are involved. Here are five of them to consider:

What Does The Cash Flow Look Like? 
The first factor that should be examined is if a property will produce a positive cash flow when it’s rented out. If the rental income is more than expenses like taxes, monthly mortgage, insurance, vacancy, utilities, repairs, etc., it will be profitable and may be a good candidate for creating rental income.

Considering Taxes
The Internal Revenue Service allows homeowners to avoid paying taxes on the sale of their home if it has been their primary residence and they have lived in it for a minimum of two of the last five years. This is based on sales that are at least $500,000 when married and $250,000 for individuals who are single. On most capital gains, an individual has to pay taxes that are equal to as much as 20 percent of the sales price.

Tough Markets
By renting out a home, it leaves a back-up plan during times when it would be difficult to sell. For example, if a person gets a job offer in a new city and the value of their house is currently below what they paid, they’d have to bring cash to the table. By renting, it would give them time to see if the market can recover.

Handling Tenants
Another consideration that should be analyzed is if a person wants to actually become a landlord. While there are a number of good tenants, some individuals require patience and time to deal with. There is always the option of using a professional property management company to handle everything, but that would cut into your bottom line.

How Does The Future Look?
If the future for appreciation looks bright, a person may want to keep their home, rent it out, and see if its value escalates in the next three, five or ten years. While no one has a crystal ball and can accurately forecast this, a person can gauge if growth is possible. Are current homes being renovated? Are retail buildings being constructed in the same location? These type of indicators are positive signs that the value of a home could appreciate in the future.

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Pets are Taking Over the Real Estate Market

Millennials are now one of the biggest contributors to real estate markets across the globe. This means their wants and needs are significantly driving supply and demand.

More and more adults are waiting until later in life to start a family, choosing instead to focus on travel or career opportunities. However, it isn’t uncommon for young adults to have a pet. In fact, the American Pet Products Association claims that 73% of American millennials own a pet.  A recent study indicated that one third of millennials buying a first home were influenced by their pet’s needs when making their decision.

For many pet owners (especially those who own a larger breed of dog), renting isn’t an option. Properties that allow pets are either expensive, too small or non-existent. This means buying is more attractive, but the home has to be just right.

Yard Space

In past years, it was popular for people to want a decent yard for their children to play in. People with a dog now more commonly desire the yard for a different reason. Similarly, they want the yard to be private and somewhat fenced in. For people with larger dogs that can easily jump a 3-foot fence, the higher the better.

Flooring

Understandably, both cat and dog owners prefer hard floors over carpeting. It makes clean-up easier. There is also a concern with soft or cheap floors because a pet’s claws could cause expensive damage.

Stairs

Single-level homes aren’t just appealing to the aging population. They are also great options for people with elderly pets who have trouble with stairs.

Research suggests that the millennial desire for smaller, single homes that suit a pet’s needs are causing prices of those homes to rise because there isn’t enough supply to meet the demand. Assuming a high percentage of apartments continue to enforce animal bans, the desire for single homes will likely continue to rise.

The desire to keep their pets happy isn’t a second thought for many young people. It is at the top of their priority list, putting some properties out of the running immediately. Their pets are seen as part of the family, so ensuring their pet’s comfort and happiness is equivalent to ensuring their own peace of mind.

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