Flipping your first house is a thrilling undertaking. After putting in the hard work of choosing everything from the flooring to finding the perfect finishing decor, you should feel proud of your major accomplishment. Once you approach the end of your project, however, you are faced with one final decision: Sell the property or rent it out?
If you are torn between these two options, here are several important questions for you to consider.
How is the current housing market in your area?
One of the most significant factors in your decision to rent or sell should be the current housing market in your area. Do research to find out the following: Are home prices slumping, or are homes selling for a reasonable (or higher than normal) price? What is the current demand for rental properties in the area? What is the future outlook for home and rental prices?
Gathering data like this will help inform your decision. You can use this information to quickly assess whether renting or selling would bring you the highest profits. When it comes to flipping houses, knowledge is power.
Do you have the time to be a landlord?
For many individuals who flip houses, another major determining factor in renting or selling is the time they have available to dedicate toward being a landlord.
Landlords are responsible for the majority of repairs needed in a home or apartment. At a moment’s notice, you may need to replace electrical wiring, handle a plumbing emergency, or replace an appliance. Thankfully, those who don’t have the time to work as a landlord can hire an experienced property management company like Clark Real Estate. Property management companies handle most of the time-consuming duties involved in renting a property — including tenant screening, rent collection, and repairs.
If you instead opt to be the landlord of your property, ensure that you have plenty of extra funds saved. The cost of emergency repairs can quickly add up, so it is important to have enough in the bank to cover these expenses and that you work with qualified professionals to make repairs. For instance, if your rental property needs window repairs or replacement, you can find local contractors through Angi.com and view customer testimonials and feedback. Before hiring a service, insist that they’re licensed and insured and can provide you with referrals upon request.
What are your long-term financial goals?
If this is your first investment property, you may have not established long-term financial goals for this project. However, setting financial goals for yourself and for this property is critical in helping you decide how to move forward.
For example, are you looking to make a lump sum to reinvest into your business? This option makes the most sense if you are formally starting a career or side hustle as a house flipper. The cash that you will receive from the sale of your property will not only pay off any outstanding renovation bills, but it will also give you a large chunk of money to use on the next house you plan to flip. If you instead want this property to provide you with a stream of passive income, renting will always be the best choice. For as long as you desire, you can generate funds from this home with no extra work involved.
What do you plan on doing with any other fixer-uppers that you purchase?
Finally, consider your plans for any future fixer-uppers you plan to buy. Was this a one-time project, or are you planning to flip homes regularly? Do you want a mix of rental properties and ones that you decide to sell? Having this plan in mind will allow you to decide whether to rent or sell this current home and all future homes you purchase.
The finality of making the decision to rent or sell your fixer-upper can feel daunting. When you ask the right questions, and do plenty of research, you can rest assured that your final decision is the right one.
Clark Real Estate offers full-service property management services for property owners and investors in and around Reno. Call (775) 828-3355 to learn more!
Clark Real Estate
305 W. Moana Ste C
Reno, NV 89509