So, you’re a homeowner, but you’re ready to move on from your current home. Whatever the reason you’re choosing to leave, you now have a decision to make; should you keep the home as a rental property or just sell it?
You may think that in 2022, selling your home is the obvious choice, but there are many reasons why people choose to keep their properties & rent them out. In this blog, we’re going through some reasons you may consider each option.
Reasons To Sell
The number one reason to sell right now is pretty apparent. We’re in a seller’s market.
We have historically low inventory in almost all markets right now, which means there is high demand for properties, making it easy to get the absolute most value out of your property.
You need the proceeds from your sale to make your next purchase.
This one is also pretty self-explanatory; if you’re banking on the equity you’ve built up in your home to make your next purchase, you simply don’t have the option of keeping the property and renting it out.
Your Property Doesn’t Make Sense as an Investment Property.
This is probably the most complicated and important part of deciding whether you should keep your property & rent it out. When determining if your property would make a good rental property, there are many factors to consider.
First, you should consider the area your property is located in and determine if there’s a high demand for rentals. If there is high demand, you need to consider the average rental price and if that would cover your mortgage payments and other expenses. Finding this information can be challenging, so consider consulting a real estate agent.
You should also consider how old your home is and if the cost of maintenance & upkeep will be too hefty. Aside from the age of your home, you should also be aware of things like the age/condition of appliances, the furnace and air conditioning unit, the windows, & roof. These things cost a lot to replace and would be your responsibility as the landlord.
Aside from looking at the property, take a look at your finances. Are you liquid enough to complete monthly maintenance & unexpected expenses? Keep in mind that you may have periods when the property is vacant and no income coming in. You need to be able to cover all costs when the property is vacant.
Reasons To Rent
You have a personal attachment to your home.
This is one very common reason people choose to keep their properties and rent them out.
Some people hold high-sentimental value to their first homes or homes that have been in their families for generations, which makes it difficult to part from the property entirely.
Renting allows you to remain in control of the property, keep up maintained to your liking, and potentially move back in if that’s something that would interest you.
You can also keep the property as an investment for your children or retirement. If you don’t need the proceeds from the sale now, waiting until the home’s value (hopefully) increases more could be a great strategy.
Demand for rental properties is high in your area.
As we mentioned under reasons to sell, demand for rental properties is critical for this decision.
If there’s high demand and comparable properties are currently being rented out in your area for an amount that would cover all of your costs, renting could be a great option.
Again, consult a real estate agent to get accurate and up-to-date information about rental comparisons in your area.
Managing your property actually appeals to you.
This could be the most crucial factor in choosing to rent out your home.
Becoming a landlord is a HUGE undertaking. You are responsible for following all rules and regulations set out by your city/province. In Ontario, the Landlord & Tenant Board enforces regulations laid out in the Residential Tenancies Act. More often than not, these regulations are in place to protect the tenant’s rights. If you do not follow these regulations, you could be charged fines & reprimanded by the Human Rights Tribunal of Ontario.
Aside from potential legal implications for not running your rental property ethically, you also need to be prepared to take full responsibility for all repairs & maintenance requests made by your tenant.
You either need to become a part-time handyperson or be willing to hire professionals. This is also something to keep in mind if you’re moving away from your current city or area. The further you are from your rental property, the more troublesome it will be when issues arise.
If you’re torn between selling or renting your property, we hope these tips will help you. We always advise our clients to make the best decision for themselves and provide advice with every step of the way. We tell our clients that if they have a good personal use or a higher/better investment use for the proceeds from the sale of their home, then it absolutely makes sense to sell.
When you’re a homeowner, you have many options for using the equity you’ve built up, so make sure you consult professionals to see the best solution for you.