Has the Bubble Burst? ….. Should I rent my house or sell it?
Turn-Key Properties LLC offers many solutions to home owners who are "stuck" in their house. We can help you with lease-option, rent-to-own, short sales and many other creative options to free you from your home.
I think most can agree that the bubble has burst, even in neighborhoods that have seldom seen a decline in value. I first wrote an article on this page back in 2006 when I was reading articles like John M. Berry’s Slowing Housing Market.
The 2010 spike in home sales and the subsequent price increases were a direct result of the tax incentives offered to home buyers. The tax credit has expired and lenders are still tightening the restrictions on home mortgages.
Reuters reported in April 2007 that The U.S. rental housing market is likely to improve with the fallout of the sub-prime lending market, as defaulted borrowers become renters.
But the rental market continues to flourish. While there are many more homes being offered for rent, there are still many people finding they have no option but renting. With lenders imposing tighter restrictions and so many good people who lost their homes because of bad mortgage choices, the pool of prospective renters continues to grow.
So what if you have to move but can’t sell your house for what you owe or what you would like to get. Turn-Key Properties LLC may have a solution for you. Rent it out! Lately we have even found that some HOA’s that do not allow rentals in the neighborhood are caving to pressure and allowing changes.
What does all that mean to you?
I have been in this industry for a long time. In the years preceding this mainly 2004 and 2005, the rental market faltered while the sales market boomed. Buyers were buying, sellers were selling, and flippers were flipping. About the end of 2006 the rental market started to make a comeback and we saw fewer sales and longer listing periods before a sale.
Since the end of 2006 sellers have been calling, telling me their house has been on the market many months and they are thinking of renting. We have added a large portfolio of otherwise typically owner occupied homes to the list of rental units we manage. The interesting thing is we rented them all within a few months.
One very successful type of property that is not normally viewed as rental property is equestrian property or homes on acreage. This makes for a very attractive rental property and with the right marketing can be quite successful.
The mortgage industry crisis has created several types of fallout:
1: Foreclosed homeowners coming back to the rental market.
2: tighter availability of funds making it harder to acquire that mortgage to buy.
3: A massive glut of vacant and foreclosed property to choose from.
Conclusion: More houses, fewer buyers
Given these disturbing facts and the fact that housing values still seem to be on the decline. I would suggest that this is a great time to rent your home as opposed to selling it. Turn-Key Properties LLC is one of the few companies in Kansas City that has experience in offering homes both for sale and for rent.
Click here to see our Property Management page and download a copy of our management agreement.
Waiting until the market improves can provide you with several benefits.
Increased Equity; the renter is paying down your mortgage.
Market Change; let us all have faith that the real estate market will make a comeback soon.
Pre-Payment Penalties; If your mortgage has pre-payment penalties you may save money by waiting before you sell.
Tax Benefits; Consult your tax adviser but owning rental property can have great tax benefits. There may also be pitfalls to avoid as rental property may have Capital Gains you would not have with the sale of your personal home.
While your goal may not have been to be a landlord, it may be in your best interest to consider renting your home instead of selling it. If you purchased your home in the past few years it is quite probable you have no equity and have possibly seen a significant loss of equity due to the real estate market.
Hang on, wait it out and consider it a retirement plan. Even if the rent covers only the taxes, insurance and interest, you are gaining equity and perhaps making money.