Blog :: 06-2019

Amanda Davidson Real Estate Group is Northern Virgina's most trusted local, independent resource for real estate news and insight. Our team has its finger on the pulse of the real estate market in Alexandria and the surrounding counties. Here you'll find the latest market updates, local news, and tips for buyers and sellers.

Should I Sell My House Or Rent My House

Should I Sell My House Or Rent My House

This is a question that I have been asked this year more than any other year during my time in real estate. My answer is always it depends on your personal situation.

 

If you are thinking about moving to a new home whether it’s in the same area or relocating all together you’ve probably thought … should I sell my house or rent my house?

 

As with many decisions, there are pros and cons to selling or renting your home. Deciding which option is best for you comes with considering several factors.

 

Should I Sell My House Or Rent My House? 

Selling My Home: Factors To Consider

Your Home Is Not Your Responsibility After The Sale

If you sell your home you walk away after the sale, no future responsibility to the property whatsoever. Plain and simple every single responsibility that comes with renting your home is avoided altogether if you sell.

 

Selling itself takes work and commitment, even with the best agent guiding you but, it’s temporary and once your home is sold you move on with your life.

 

If you are moving to another state selling is often the best choice. It’s stressful managing a rental property in general and when you factor in being in another state it only complicates matters. Owning two homes means double the responsibility.

 

No Tenants

As with most things in life not all tenants are created equal. They’re strangers living in your home and unfortunately, sometimes that means damage occurs. The extent of damage is an unknown. It could be nothing outside of normal wear and tear or it could be a destroyed house.

 

There’s stress that comes with owning a rental property and the unknown of what and when repairs and maintenance will be needed. If you sell then you will have no tenants or damage to worry about. You will receive your proceeds at closing and the new owner will be responsible for what happens to the house.

 

Remember that if you decide to rent your home and then sell later you will likely be selling it with tenants occupying it unless you can afford to pay the mortgage and keep it vacant. Selling a home with tenants living in it is a challenge at best and a nightmare at worst. They can be very difficult when it comes to preparing your home for sale and allowing showings which often results in lost profits for you.

 

You’ll Have The Equity From Your Home

This is often the biggest factor that causes people to decide to sell. Selling your home will give you the equity that comes with it.

 

That could mean the down payment you need for your new home, having a higher down payment than you’d have if you didn’t sell or have an influx of cash in general.

 

Renting My Home: Factors To Consider

Do You Want To Be A Landlord

Being a landlord is a big responsibility. It’s far more than collecting a check each month. 

 

Being a landlord comes with unknowns because you don’t have much if any control over what tenants do while they occupy your home. Some will be wonderful, pay on time, and treat your home well. Others won’t pay on time and will destroy your property.

 

If you’re comfortable with knowing you’ll need to answer tenant calls, respond to maintenance requests, track down rental payments and handle getting the home ready to turnover in between tenants then being a landlord might work very well for you.

 

You could also consider hiring a property manager to take some of the day to day responsibility off of you. They typically charge in the 10% range of your monthly rental income.

 

Is Your Move Temporary

If you know you’re going to return to the area your home is in renting may be the best option. Selling and buying homes comes with costs and financially it may be best to rent your home out knowing you’ll be returning.

 

You can always decide to sell down the road if your plans change. Understanding that whether you return or end up selling there will be items to repair or update is important to factor in as part of your decision.

 

Will Renting Be Profitable

Not every property is going to generate positive cash flow and analyzing your home to understand if it will is a big factor to consider.

 

To determine if renting your home will be profitable you need to consider all the expenses and deduct them from the income you’ll receive from renting.

 

Mortgage, insurance, taxes, and HOA or condo fees are just the basics.

 

You'll also want to consider maintenance and repairs. Vacancies are frequently an overlooked expense. It is highly unlikely and not realistic to expect to have your property rented at all times.

 

If you’re going to hire a real estate agent to rent the property or a management company to oversee it both of these come with commissions and fees that you’ll want to plan for. If you plan to rent the property yourself be sure to budget for advertising costs.

 

While you can get an estimated budget for expenses it’s not an exact science. Be conservative when running your numbers. It’s often very helpful to consult with a local real estate agent to find out what your property can rent for in the current market as well.

 

Long term you’ll want to keep in mind rental prices go up and down. Just as the market changes for home sale prices it does for rentals as well.

 

Market Conditions

Speaking of rent fluctuating this brings us to market conditions. Many housing markets have seen increases in recent years and are on track to continue to appreciate. While there’s no guarantee your home will go up in value there are indicators to review to guide your decision.

 

If your home is in a market that is likely to increase over the next couple of years you could hold onto it by renting it out and selling for a higher price down the road.


Condition Of Your Home

Buyers are picky and in today’s market, the vast majority are looking for a turnkey property. Does your home need improvements or updating? If you don’t have the money to do them right now renting could be a good option.

 

Tenants differ from buyers in that they are willing to accept homes that are less updated. Renting your home could allow you to save up for future improvements before selling at a different time.

 

Tax Consequences

This is one that I often see overlooked. If and when your home produces cash flow from renting there are tax consequences to factor in. At that point, your home is an income-producing asset and you will be taxed on the income you make from your rental.

 

You can write off the costs associated with renting your home and in turn that will lower the income in which you’ll be taxed on but, it’s still something to consider.

 

Always best to consult with your accountant on taxes. They will be able to consult with you on what can and can’t be written off and how a rental property will impact you.

 

Closing Thoughts

Careful thought and consideration should be put into your decision to sell or rent your home. It’s not something that should be decided overnight. The right choice depends on what your personal circumstances are. Weigh the pros and cons by considering the factors above and then determine what’s best for you.

 

Additional Resources

Buying A Home vs. Renting

Non-Owner Occupied Investment Properties via Luke Skar of Madison Mortgage

 

Top 5 Reasons Real Estate Agents Fail

Top 5 Reasons Real Estate Agents Fail

Why do the majority of real estate agents fail?

 

A friend of mine who is newly licensed reached out to me last week to say he thinks he just “stinks at this real estate thing.” Questions immediately came to mind when I saw his message and it got me thinking about just how many real estate agents fail.

 

Depending on the source the percentages vary from 85-90% in the first five years. That’s a HUGE percentage and yet the perception remains both with the public and many interested in real estate that you get your license and start making serious money. It couldn’t be further from the truth.

 

There are a variety of reasons real estate agents fail. For this article, I’ll stick to the top 5 reasons real estate agents fail. Whether you’re already licensed or studying to get your license being aware of why agents fail is important. You’ll want to avoid these reasons to avoid becoming part of the statistic.

 

Not Knowing How To Lead Generate

There is no one size fits all for lead generation in real estate. Which is a great thing because it means real estate professionals can generate business in a way that works best for them. The problem is that if you don’t know how to generate leads and referrals you’re going to fail.

Successful real estate agents know exactly what they’re going to do to generate leads and how they’re going to do it. They know their business depends on it. One of the first things new real estate agents should do is create a business plan that outlines how they want to generate leads.

 

It doesn’t matter if it’s through door knocking, social media ads, or any of the other hundreds of ways there are to generate leads. What matters is the agent knows what they’re going to do and how they’re going to do it.

 

No Understanding Of How Or Where To Market

If you shake a tree 20 real estate agents will fall out. What are you going to do to make yourself stand out? Real estate agents who look at marketing as an opportunity to say look at me…ME…ME…ME will find themselves blending in and not getting business.

 

A self-serving mentality is a sure fire way to fail in real estate. Your marketing needs to come from a place of value and be consistent with your brand.

 

Share helpful advice, personal stories, checklists, and first-hand experience. Solve a pain point your audience has. No one cares if you sold 5 houses last week and are “crushing it.” Serve your audience with what they can actually use.

 

There are a ton of different ways real estate agents can market themselves but, until you have a plan in place don’t spend a dollar on marketing.

 

No Mentor Or Coach

I purposely didn’t list this one first to illustrate that you’re going to need someone to teach you how to lead generate and market yourself correctly. Whether it’s your broker, a team leader, or a successful individual agent who you partner with as your mentor or coach you’re going to need someone to teach you to be an expert.

 

This is, in my opinion, a factor that can make or break a new real estate agent.

 

Passing the test to get a real estate license is easy and teaches you absolutely nothing about actually selling real estate. The test is just like school, memorize the info and then answer questions. Day to day life as a real estate agent requires running your own business which requires an extremely high level of various skills in order to be successful.

 

Soak up every ounce of knowledge from someone who is successful and who already has a business like the one you envision yourself creating. Be a student of the industry and be willing to make less money in return for gaining expertise. You cannot put a price on expertise and I see far too many new agents focusing on their splits when it comes time to select a brokerage or team. Stop worrying about commissions because 100% of nothing is nothing.

 

Get Into Real Estate For The Wrong Reasons

A lot of real estate agents fail because they get into the business thinking they’re going to pass the test, start selling a ton of houses and make a ton of money. If it were that easy everyone would be a successful real estate agent. This couldn’t be further from the truth. Let’s not forget the average real estate agent makes $40,000 annually.

 

Another reason people get their real estate license is they love “looking at houses.” Yes, houses can be nice to look at but, that’s not what real estate is about. Simply opening a door to let someone in a house is not going to get you anywhere remotely close to being successful in real estate.

 

If you want to get into real estate you need to first ask yourself why. You are signing up to assist people with what is most likely one of the biggest investments in their lives. That comes with a massive responsibility to be an expert and advocate on their behalf.

 

Poor Work Ethic

When you become a real estate agent you are entering the world of entrepreneurs. There will be blood, sweat, and tears to become successful. If you have a 9-5 mentality you are going to fail. Successful real estate agents work long hours, nights, and weekends.

 

You don’t get paid to show up when you own a business. Real estate is not for everyone nor is owning a business.

 

Real estate is flexible in that you can very likely run errands on a weekday which equates to your personal business revolving around your client needs. It is not flexible in the sense of being able to work whenever and wherever you want.

 

It requires working every day, there is always something to do. Many agents fail because they don’t have a plan or action items to complete each day.

 

Successful agents make themselves available to their clients and respond quickly to phone and email contact. Being successful in this business requires a high level of communication and it’s not uncommon for that to occur 7 days a week. Agents who don’t put the work in will not be successful.

 

 

Closing Thoughts

The perception of what being a real estate agent involves and the reality are on opposite ends of the spectrum. The barrier of entry into the profession is low and the failure rate is high. Being a successful real estate agent might look easy on the surface but, being in business for yourself is never easy no matter what the industry is.

 

The failure rate is staggeringly high but, if you understand what you’re getting into, surround yourself with the right people, and work tirelessly you can beat the odds and become successful.