Sell or Rent? 7 Things to consider when it’s time to move.

Whether you’re relocating or ready to right size, deciding if it’s better to sell or rent your home can be a big decision. Understanding what your options are and the potential risks of each are important in making the decision that is right for you. So where to start:

Contemporary-home

1. What is your home worth?

Your home is likely one of your most valuable assets and determining the market value of your home is a great place to start. Zestimates and online estimation tools can be a place to start, however, they can be off by on average of 20%. With just an address, myself or another Realtor can generate a market analysis that compares properties that have sold or are active in your area to provide you with a current estimated value for your home. Request a Market Analysis

2. How much rent can you get?

Rent can vary greatly in a market. Research what homes are renting for in your area. Understand that prices can vary based on location, amenities, and condition of your home. Spend some time looking at the popular networks where properties are listed. Craigslist and Zillow could be good places to start. Try online estimation sites like www.rentometer.com to get some general information about rentals near you.

3. What’s your expense footprint?

The mortgage is typically the biggest percentage of the expenses that go into the home but smaller things need to be considered. Taxes, homeowners association fees, and maintenance can add up and need to be planned for. A reserve fund that will cover the required home maintenance should be implemented for things like replacing the roof or the hot water heater when their time is up.

4. Will your property cash-flow?

Understanding if your home will capture enough income to cover the expenses is likely to be the most important decision point in buying or selling. Will renting provide enough income to cover the mortgage, taxes, maintenance, management fees (more on this later,) repairs, and legal considerations. Create a spreadsheet, or try one of the online calculators which will help you understand what you can expect.

5. Property management or self-managed?

Determine if you have the time and are willing to put in the effort in managing your home as a rental. Are you willing to take a call at 2 am on a leaking faucet or would you rather pay someone else to do it? Property management can cut into your bottom line but could save your sanity when it comes to working with your tenants. Management fees can vary and may run about 10% of the rental rate of your home.

6. Interested in renter rights and landlord-tenant laws?

Every state and many cities have their own set of laws and regulations regarding the tenant-landlord relationship. It’s important to fully understand your local laws and renter rights. This is where a property management company will be a big asset. They know the local ordinances and have a system in place which ensures that the rights of the tenant and landlord are maintained. Violations in the tenant-landlord relationship tend to favor the tenant and be expensive if violated.

7. Do you know the tax potentials of each option?

Taxes. A topic that most people avoid until they can’t any longer and one that can have a major impact on a decision to rent or buy. If your home has had a significant increase in value since you purchased it, you can avoid paying capital gains on $250,000 (or $500,000 if married filing jointly,) if you’ve lived in the home 2 of the last 5 years. On the flipside there is the potential to write off expenses on a rental. If renting your home is a potential I recommend talking to a CPA who specializes in Real Estate. They can better explain the ins and outs of how each option could impact your future taxes.

It’s a big decision.

Wether you plan to sell or rent, take the time to do your homework. Understanding what each option can mean for your investment and life goals is an important step in making the right decision. Reach out to professionals to get accurate and timely information.

 

Posted on October 28, 2016 at 10:13 pm
Paul Sardoch | Category: Market, Real Estate News, Uncategorized | Tagged , ,

Tips for a Second Home Mortgage

Are you considering buying a piece of property as a second home or investment? Perhaps you are looking for a small condo or bungalow where you can escape for vacation, or maybe you want to have another home closer to family. Maybe you want to rent out your second property and make a steady income from your investment. Whatever the reason, a second piece of real estate can be a fantastic investment. However, sometimes getting a mortgage on your second home can be a challenge.

Generally, a mortgage lender will have tougher standards for second home loans than primary home loans. This is because usually when you are buying a second home your finances will be stretched thinner and you will have less money to spare because you are already paying a mortgage on your primary home. This will mean that your second home mortgage can be harder to get and might have a higher interest rate.

Here are some tips to keep in mind that will help you to get the best mortgage on your second property: Build up a decent amount of savings. Your mortgage lender will want to be able to see that you have a large amount of savings so that you will have enough to pay for the mortgage even if you were to lose your job.

Pay off any credit card debt. Many lenders will be hesitant to approve your second home mortgage if they see that you have a lot of debt on your credit card. They will want to see that you have a low debt to income ratio so that you will be able to pay back the loan.

Use the first mortgage as a good reference. If you have always made your payments on time and you are most of the way through paying off your first house, you could ask someone from your current mortgage company to vouch for you. The lender for your second mortgage will be reassured that you are a reliable person to loan money to.

These are just a few tips to keep in mind in order to make getting a mortgage for your second property as easy as possible. To find out more about investing in Portland property, contact me at sardoch@windermere.com or call me (503) 913-7615. Keyword: Portland Property

Posted on August 25, 2015 at 9:30 pm
Paul Sardoch | Category: Real Estate News | Tagged , ,