When it comes time to downsize or if you need to move away, you may be wondering whether you should sell or rent out your property. When it comes to unused property, most people would opt to sell first before leasing. After all, a one-time buyer-seller transaction is easier to manage than a long-term landlord-resident relationship, and the lure of the lump sum is also hard to resist.
But making the choice to sell or lease is not just about the money. Leasing property is the smarter idea in many situations. If you’re looking to build wealth, leasing your property could be a great way to bring in passive income and help pay your mortgage.
Here are 6 reasons why and when you should consider leasing:
1. Your plans for the future aren't certain
You may not have a need for your property at the moment, but that can change in the future depending on what stage of life you're currently in. If you're moving to another city for a new job, selling your property looks like the easiest option for letting it go.
But unless you're 100% sure you're not going to move back again, it's a good idea to keep your property so that you have a place to return to. In the meantime, leasing the property can help you cover your mortgage.
2. Your property is in a great location
The value of real estate largely depends on the location. If your property is a good rental property in an area with potential for development, then its worth is likely to rise in the future, and that alone should be a good reason for you to hold on to it.
Not sure what the current trend is? Check the prices of similar properties within the vicinity. A consistent increase within the last couple of years is a good indicator of that your property will appreciate as well. Check the news as well.
3. Your property is in good condition
People often choose to sell their property when the upkeep is no longer practical. This usually happens with older homes in need of constant repair and maintenance checks. But if your property is in a good condition -- and if it's also in a strategic location -- you can ask for a high rental fee and still find someone who's willing to pay for it. In this way, you're getting a good amount of money for your property without losing ownership of it.
4. You're not in urgent need of money
Owning property is like having a guarantee that you'll have ready cash in case of emergencies, like an unexpected medical condition that needs treatment not covered by insurance. Thus, selling your property when you aren't pressed for cash means you're removing your fallback in case a financial crisis does come up. If you have several properties, that's not going to be a problem. But if you have only one or two, you have to be careful consider when you're going to let them go.
5. You want a steady source of income
Leasing your property won't give you a huge payout compared to selling it, but you'll have a source of passive income over the next few years (or for as long as you decide to lease the property). It's one of the easiest ways to earn money because you're letting your property work for you instead of the other way around. At the same time, it serves as another layer of financial protection. In case your business fails or you get laid off at work, you'll still have money coming in.
Hiring property management professionals to help you maintain and manage your property and tenants will also help you make money without investing your time. San Diego property management companies are capable of handling everything from listing to leasing your property so you can focus on your job and hobbies rather than property management.
Take the Leap
If any of these situations applies to you, it's best to forgo selling and focus on leasing your property instead. But once you've decided to be a landlord, what's the next step to take? There's so much to consider, such as legal issues and liabilities of running a property. To ensure that you do it right from the start, opt for rental management in to help you navigate the world of real estate. Download our guide to learn more:
We at Property Advantage have a team of skilled property professionals to manage your property while ensuring compliance with rental laws and regulations, so you never have to worry about it. From tenant screening to eviction assistance, we've got you covered. Contact us now to inquire about our services.