Should You Rent or Sell Your San Antonio Home?
Are you going to rent that?
In San Antonio‘s real estate market these days, there is always the question of should you rent or should you sell your home? During the days of cheap and easy credit, many people began dabbling in rental income properties, bought a home that is now worth less than they paid for it (an underwater mortgage), or tried their hand at flipping homes. With these purchases, there are many San Antonio home owners considering the pros and cons of renting vs. selling.
Property management isn’t quite the same as selling and helping people buy homes. For that very reason, I am not a property manager. I find that that work is better suited to agents who run full time staff to deal with the daily situations and needs of their landlord-clients. I’m thinking of a second post about property management from an agent’s perspective, so look for that soon. With that being said, I don’t have all the answers to the question of rent or sell when it comes to your San Antonio home, but I do have some things for you to consider.
Sell Your Home.
There are obvious reasons to sell your San Antonio home. Selling it can relieve you of the day to day worries of owning it. Perhaps the mortgage is too much and you’ve lost your job. Perhaps you’ve decided to relocate. Perhaps you bought it for the purpose of fixing it and flipping it and then realized you don’t know your drywall from your caulk gun (ok, I hope you know at least that difference). Whatever your reasons are, you’re thinking of whether to sell or rent.
Selling has the obvious advantage of being done with the home and if you can sell it for enough, a nice chunk of change to do whatever it is you want to do next. You’ll need to factor in the costs of selling your home – time it takes on the market (you’ll still be paying the mortgage), costs to clean it up (you want it to shine) and fix any potential problems (that leaking roof is not going to help come inspection time), commissions (unless you go it alone, but you know how I feel about that), any charges at closing (closing costs, surveys, title insurance, concessions), and payoff of your loan(s). Once you have an idea how much you can walk away with from the sale of your home, you have a good starting point. Are you happy with that number?
In the case of a short sale, you may walk away with nothing from the sale of your home and may still be liable for the portion of money the bank didn’t recoup.
Have your agent work up a comparative market analysis of homes in your area. Get a feel for the pricing and take an honest look at your home – does it compare to the next door neighbor’s or the guy at the end of the block? You might be living in the same exact model of home, but condition, upgrades, and curb appeal matter. Look at your home pricing as a range. The less you sell it for, the faster it will sell. The more you sell it for, the longer it may take. Talk to your Realtor® about your concerns and listen to what they think based on their experiences.
Rent your home.
If you’re not quite ready to sell your home, perhaps you can rent it out? The obvious advantage is cash coming in. The goal is to get more in rent than you pay in mortgage. This would result in positive cash flow for you – the goal of landlords everywhere. Much like selling your home, you should have your San Antonio Realtor® run a report on comparable rentals in the area. Price your rental too high and it will stay vacant. Vacant homes are not only no good for your wallet, they also hurt neighborhoods as a whole (who wants to live in a neighborhood full of vacant houses).
With market rental data in hand, you’ll need to consider the cost of hiring a property manager. As with anything in real estate, you can rent your home by yourself, but be advised, there are many laws regarding rentals and making mistakes and breaking those laws can be costly. Most property managers take an agreed upon fee upon lease signing and then charge a monthly commission as a percentage of the rent. In addition, you’ll need to keep some cash reserves for necessary repairs and maintenance.
I highly recommend hiring an experienced, qualified property manager and not just any San Antonio agent. I don’t usually do many rentals (I did when I first started), but occasionally I will help a friend or client find a home to rent. There is a huge difference in dealing with a good property manager and an agent who just took on a few rentals to keep the money coming in. Without the expertise and staff of a property manager doing the leasing, I find rentals to be a complete nightmare to find and help my clients lease. Do yourself a favor and go with expertise over “they sold me my house” style loyalty.
I hope this has given you some thoughts about whether to rent or sell your San Antonio home. If you have questions, feel free to give me a call and I will answer your questions and be glad to tell you a few property managers in town I would suggest (RE/MAX Access runs Moran Property Management – with a full time staff dedicated to just rentals).
Special thanks goes to @firstfridaysa of First Friday San Antonio for the idea to write this post.
photo courtesy of TheTruthAbout…
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Comments
Matt,
Nice synopsis here in terms of renting vs selling. Each individual case can provide a different outcome. Love the blog ! ~ Chris
.-= Chris Somers´s last blog ..LGTripp Gallery Opening in Old City =-.
Chris – Thanks for stopping in. As I mentioned, I don’t dabble in property management, but I do think it’s important for owners to know their options. There’s a lot to consider on either side and anyone seeking to make a decision between the two really needs to look at the numbers, what they’re comfortable with, and go from there.
.-= rerockstar´s last blog ..Are you a Realtor® in San Antonio? RE/MAX Access is in Garden Ridge? =-.
rerockstar, how about a hybrid of the two with a “rent to own” program? Do you have any recommendations or had any experience with it? I live in Oklahoma City and rent to own is becoming more and more popular up here. What are you seeing in the San Antonio market?
Rental Ads – I’m not a fan of “rent to own” as there is too much risk on the buyer/tenant’s end and not enough security. What if they pay into their lease term and the seller/landlord doesn’t pay their mortgage? There is no protection for the buyer/tenant if the home is foreclosed on. As well, often the terms of these rent to own programs are harsh to say the least and look more like predatory lending to me than much else. Setting unrealistic terms and balloon payments for the buyer/tenant that will bring hardship on them in the long term and increase their risk of default. It’s a winning proposition for the seller/landlord, but I advise my buyer clients to look elsewhere.
Good points. A rent-to-own probably isn’t the first option for most buyer/tenants. But for those who do not qualify for a mortage and want to eventually own their own home, I do think it can be a valid option, assuming the situation calls for it.
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