Rent or Sell Your Remodeled Property?
The house-flipping process can be fun and challenging. However, some people don’t know the best way to profit from the home they’ve renovated once they’ve completed the process. Selling and renting the property each has unique benefits and drawbacks, so thoroughly consider both avenues. Here are some things to keep in mind from Natalie Jones of HomeOwnerBliss.com.
Selling the Property Provides a Faster Profit (If the Margin Is There)
Many people opt to flip houses quickly and profit directly from renovations and improvements they’ve made. This is a good choice if you don’t want to be a landlord and you want to move on to the next house or project quickly. However, it can take some time to sell the property depending on the area and the current market, so be sure you’re willing to lose the money you might have made from rent while waiting for it to sell. Also consider tax implications. In most cases, this type of short-term profit is taxed as regular income.
Renting Can Yield Long-Term Benefits
Renting out a home can make you some profit on top of monthly mortgage payments and enables you to profit from equity if you decide to sell the home. However, renting out your investment property means being a landlord, so you have to deal with any issues that arise. You can hire a management company to deal with tenants for a percentage of the profit. You can also hire landscapers, contractors, and other professionals to maintain the property, but the rental income needs to justify all these expenses to be worthwhile.
Many people think about renting properties in residential neighborhoods or renting commercial properties, but vacation rentals can be lucrative as well. If your property is in an area with consistent tourism or attracts many business-related visitors, turning it into a vacation/temporary stay rental may be the best option.
If you intend to have rental properties, establish a business to serve as the legal entity. This will provide you several advantages, including protecting your other assets in the case of a lawsuit.
Remodeling the Actual Property
Remodel the home in a way that makes it more attractive to tenants or buyers. Be careful about replacing features in the home that may have artistic or historical value. Features that evoke certain time periods and have value in themselves can be attractive to certain types of homeowners or vacation renters, so be strategic about what you replace and what you leave as is. Removing or altering certain architectural features may reduce the home’s value, while restoring those features may enhance the value.
The Best Types of Improvements
If you want your property to be attractive to prospects, renovating damaged or outdated kitchens and bathrooms is a must. If the property has a front yard or backyard, strongly consider erecting a fence, since this is important to renters with kids and pets. Online contractor reviews can give you a sense of each business’s qualifications. Ensure anyone you hire is licensed and insured and is prepared to scout out any utility lines. New fences typically cost around $4,500 but can cost more or less depending on the size of the backyard, the materials you want, and the location.
Selling or Renting Depends on Your Needs
Assess your goals for an easy solution to whether you need to sell or rent your renovated property. Consider the costs involved in renovations, and don’t overlook the value of antique fixtures or historical attractions in the home. By making careful and relevant improvements, you can attract the right buyer or renter more easily. For help taking the next step in your real estate investment journey, contact Christine McCarron today!