Finding a new home is an exciting prospect, but the idea of moving brings up a lot of questions and uncertainty regarding selling or renting.
For homeowners, one of those questions might be: should I sell or rent my home? There is no simple right or wrong answer to this question, but rather, a few factors to examine in deciding which choice is right for you.
The first factor in deciding “should sell or rent my home” is the cash flow. Cash flow is how much money your rental will bring in every month after you’ve paid all the expenses. It’s a simple look at the numbers, costs and income associated with renting.
To determine cash flow, start with a rough idea of how much you could rent the property out for monthly. Next, add up all the expenses associated with the property. Don’t forget HOA fees, management fees, taxes, insurance, repairs, and utilities. Then subtract the monthly expenses from the monthly rental value and you get your cash flow.
If the amount of cash flow is negative, renting is not a good option for you. A small amount of positive cash flow is good, that means you can keep the property and have someone else pay your mortgage entirely. A large amount of cash flow ($500 or more) is an indicator of a really good rental property.
Another important factor when deciding whether to rent or sell is where the home is located. Homes in college towns or those that are close to the freeway in an urban area tend to rent easily, so owners don’t worry too much about vacancy. On the other hand, homes in rural areas or less desirable neighborhoods might have a harder time finding tenants.
The rental market in Colorado Springs is really strong. Most good rentals have no problems keeping long-term tenants, and the price for rentals is increasing year after year. In fact, The Colorado Springs Business Journal reports that Colorado Springs is the third best housing market for rental properties in the United States. Regardless, renting out a home isn’t right for everybody or every situation.
Can You Afford it?
If you’ve figured out that the property will produce a positive cash flow as a rental and the size and location are good for renting, it’s time to think about whether or not you can afford to keep your house as a rental.
Most people who are buying their second or third home use the cash from the sale of their first home to put toward a down payment. Will you be able to come up with a downpayment for your next home if you don’t sell? What about if the rental property is vacant, will you be able to cover the expenses as well as your new mortgage? These are all questions that need answered to be able to make an educated decision.
Zech Buys Houses Will Buy Your Colorado Springs Home
Are you ready to move on to your next home but aren’t sure what to do with your current house? You might be wondering “should I rent or sell my home?” Zech Buys Houses can help. We buy homes in any condition for cash, and can close quickly so you can move on to your next adventure. We buy houses in Colorado Springs, Colorado. Contact us today to get your offer!