You may be wondering whether you should sell or lease your current home. You may want to consider the following questions:
- Do you want the potential long-term safety and investment of leasing the property or the immediate payout of a sale?
- Do you have the time to manage a leased property or will a sale enable you to engage in other investment pursuits?
In San Diego, it appears these questions may already be answered for you. Reports show that San Diego now has the highest dollar amount of rent in the country. Now is the time to lease.
Leases in San Diego
Leases and rents are skyrocketing in San Diego. According to the San Diego Union-Tribune, the average monthly payment was $1,743 at the start of September. That is an 8.4 percent increase from last year. The Union-Tribune based these calculations on data collected by MarketPointe. While the data only included complexes with 25 or more units, it remains the most comprehensive study of rents in San Diego County.
Most importantly, these numbers are not one-off anomalies. The September rate increased 7.7 percent from March when the average monthly payment was $1,618. Experts attribute the rise to a lack of new housing developments that is putting pressure on the market. Even in East County, where monthly lease payments are notoriously affordable, the average price was $1,422.
Considerations before You Lease
Great, you may think, but I still need to deal with managing the property and you are already stretched thin with your family and work, there is no way you find the time to also manage a leased unit. Essentially, the tension breaks down along two positions.
- Under the first position, sale, you can immediately get money and cut your ties with the property. If your property appreciated a lot in value, you could get a big payout.
- Under the second position, you can potentially get more money over the long-term and keep the property as an asset that can grow even more over time.
You need to balance the immediate benefit of selling versus the long-term investment of leasing. Typically the answers fall under whether or not you need a quick payout or can afford to wait for a return over the long-term.
But those considerations should now be balanced with the current real estate market in San Diego. These skyrocketing monthly rates ensure that you can begin receiving a return on your investment almost immediately. The high monthly average almost guarantees that you will get a reliable monthly income.
Should You Lease?
Holding a leased property generates several advantages:
- You can obtain an additional source of revenue.
- It can serve as a reservoir of cash that you can use to purchase more properties in the future.
- It can act as collateral for a line of credit or in times of emergency.
Generally, the monthly payment you receive may not be enough to overcome the expenses associated with the property. For example, servicing the mortgage, repairs, and cleaning all add up to significant costs. However, the lease rates in San Diego have never been this high and will continue to grow.
You can rest assured in the financial viability of your leased property because new apartment construction is incredibly slow. In 2016, the City has approved only two new complexes that total 370 units.
Reservoir of Cash
Real estate is one of the most stable forms of investment. It grows in value decade over decade, even if there are dips during recessions. Most lenders will allow you to refinance when you have large equity reserves, which allows you to pull out large amounts of cash to purchase more properties and grow your portfolio. Your real estate can also serve as backup collateral if you are ever in an emergency.
Property Management in San Diego
Great, you may think, all of those positions sound beneficial but you still don’t have the time to manage the property. You still need to interview residents, pay for repairs, and generally administer the property. The prospect of extra income and reservoir of cash is great, but you cannot take on another obligation. The solution to this is finding a company to handle your property management in San Diego.
Property Advantage can take over the time-consuming aspects property management in San Diego and still allow you to collect a steady source of income. Property management does not have to consume your life, when you can hire a reliable company, like Property Advantage, to oversee your property and keep those monthly leases coming.