Trying to decide between renting or selling your property in Cincinnati OH? It can be tough to know what the right decision is for your specific needs, goals, and situation.
The short answer is you should probably only sell if the following applies:
- The very thought of the property causes you stress. Maybe it’s bad memories or bad history. If you cringe at the sound of the street name, sell it for your own sanity.
- It’s in complete disrepair AND in an area of Cincinnati where you likely will spend more on the improvements than the property is worth. In this case, sell as-is and let it be someone else’s problem to fix.
Benefits of Renting Your Property
There are some excellent benefits to renting your property in Cincinnati. Did you know Cincinnati is one of the best rental markets in the United States? People from all over the country/world like to invest in Cincinnati? Stable economics, lower cost of housing and a strong rental market means a better than average ROI for investors compared to other U.S. real estate markets.
Renting is a powerful way to make an extra income, especially if you work with an experienced property manager who can help maximize the benefits of your investment.
Here are a few of the specific benefits:
1. Build equity with a long-term investment.
Renting your property allows you to hold onto it and let it appreciate over time. So, while you’re making income from your tenants, your property may also increase in value! Down the road, you’ll be able to sell your property when the time is right and make the most profit possible from your initial investment.
Of course, if this is a primary motivation for your decision, it’s important that you keep track of the real estate market in your area and understand how much your property may appreciate. It may also take a number of years for your home to increase in value; it’s important to know that real estate investing does take time to return a profit.
2. Make regular, passive income each month.
One of the primary benefits of renting out your property is the regular cash flow that comes with a successful rental. In many cases, your rental income can also be passive, which means that it takes a relatively small amount of time and effort to maintain. This is the perfect solution for someone who wants to make more money on the side or save for retirement!
But it is important that you work to ensure that your cash flow is positive and that your income outpaces your rental expenses. Make sure that you have a good idea of what your monthly expenses will be and consider how often your property will be occupied and the average rental prices for your area.
3. Take advantage of tax deductions and benefits.
As a property investor, you’re entitled to quite a few tax deductions and benefits! For example, the government offers tax breaks for property insurance, investment property taxes, maintenance costs, legal fees, and depreciation. Plus, rental income isn’t subject to social security and medicare taxes, which gives it a leg up over traditional income!
4. Diversify your income and portfolio.
Rental properties allow you to diversify your portfolio and have secondary streams of income. This gives you added financial protection and provides a fallback should your primary source of income dry up for any reason. It also gives you more control over your money and income than a traditional job!
Cons of Renting Your Property
Of course, there are always disadvantages to everything! It’s important to consider the downsides of renting before making your investment.
1. The potential for bad tenants.
When you’re renting your home out to strangers, there’s always the potential to have bad tenants. They may not be able to pay rent, cause damage to your property, or create expensive and stressful legal problems.
A Cincinnati property management team can help with tenant management, enforcing your lease, providing solutions to tenant problems, and helping you find the right, high-quality tenants from the beginning. Their job is to be on your side and relieve many of the risks that come with renting your property.
2. A vacant property.
Vacant properties mean lost money. Even when there isn’t someone staying in your home, you still have to pay your mortgage and other overhead expenses. Rental markets also fluctuate, so you may find that you can’t bring in enough rental income to support your property.
That’s why it’s important to understand the market that you’re in and know how much you can expect to bring in and how often you should have tenants. Check out our free rental analysis to get a good idea of how much you can rent your home for and learn about other market trends.
3. Houses don’t always go up in value.
That’s right! It can be difficult to predict what the real estate market will do and, sometimes, your home may go down in value over time rather than appreciate. Make sure you understand the neighborhood and area that your home is located and know the potential appreciation over time.
4. Legal risks.
With property rentals also come legal risks. There are a variety of city, state, and federal laws you must abide by when renting your property. Make sure you have a good understanding of these laws and invest in proper insurance to protect yourself.
Pros of Selling Your Property
Selling your home may also be the best decision for your situation. There are a variety of reasons why you might choose to sell your home and, of course, there are several benefits.
1. Sell your property and get cash right away.
If you currently live in a seller’s market, now might be the time to sell! Consider whether or not properties are selling quickly and at high prices. If so, you may stand to make the most profit right away.
You may also have equity tied up in your current home that you need in order to purchase your new home. Selling your home provides cash now rather than over time, like a rental property.
2. Avoid the time and effort involved in being a landlord.
You may not have the time, money, or effort needed to rent your property. As listed above, there are some risks involved that may not be worth it to you. Make sure you consider what is involved in being a landlord before making your decision.
3. There are fewer financial risks involved.
Generally, there are fewer financial risks involved in selling your home than in renting it. If the real estate market is good and you find a good realtor, the home selling process is straightforward. But also know that with risk often comes greater reward!
4. You may be moving far away.
If you’re moving to another state or country, it can be increasingly difficult to manage your property from afar. You may prefer to sell and not worry about the “hassle”.
Cons of Selling Your Property
As with renting, there are also cons of selling your home. It’s important to weigh these verses the potential benefits and consider them in context of your specific situation and preferences.
1. You may miss out on the greatest profit from your property sale.
Depending on the real estate market at the time of the sale, you may sell your home for less than it’s worth. You could even lose money on the property! Holding onto your house and renting it for a while allows you to sell when the time is right for the maximum value.
2. You won’t build valuable equity or have a second stream of income.
The biggest downside to selling your property is that you’ll miss out on potential income. By not renting, you won’t give your home time to appreciate or have a fallback should your primary source of income dry up.
Do you have questions about renting your property? Let us know how we can help!