Once your fixer-upper is finished, you have a tough choice ahead. Do you sell the property, or do you list it as a rental? Both options can boost your income, but they each come with unique benefits and drawbacks. If you’re debating which approach is best, here’s what you need to know from Megan Hannah.
Sell vs. Rent Out: The Pros and Cons
Pros of Selling
If you sell, the biggest benefit is a quick influx of cash. Beyond that, you won’t have any ongoing responsibilities relating to the property, including no longer having to manage future property taxes and maintenance.
Cons of Selling
You can’t benefit from any future property value appreciation when you sell. Additionally, if you aren’t knowledgeable about the local market — or don’t hire a trustworthy real estate agent to help — you may not get top dollar.
Pros of Renting Out
Renting allows you to have a long-term income source, potentially a fairly passive one. If housing prices rise, you’re also building equity. That can help you get more if you sell later.
Cons of Renting Out
When you rent, you’re dealing with ongoing costs and responsibilities. Along with covering maintenance and property taxes long-term, you’ll need to manage tenants. While you can outsource the latter part to a property manager, that does come with a cost, eating into your profits.
In some cases, you’ll face challenging situations. If you end up with a bad tenant, you might have to navigate eviction processes. While you can reduce that risk with solid tenant screenings, it’s always possible.
What It Takes to Sell Your Fixer-Upper
In most cases, selling your fixer-upper is a straightforward process, particularly if you partner with a real estate agent. They’ll help you determine a solid price point, advertise the property, evaluate offers, and more.
While the median sale price in Portland, OR, is $599,000, you shouldn’t rely on that number alone to pick a price. Instead, it’s best to review comps in the area to learn more about pricing in your neighborhood. With a real estate agent’s help, that’s often a breeze.
What It Takes to Manage a Rental Property
Managing a rental property is more involved than selling, but it can certainly be a worthwhile venture. Homes typically rent for between $2,600–$4,800 per month, depending on the exact location, size, and features. That’s solid income potential.
Tenant Management
Your tenant management responsibilities mainly depend on whether you’re operating as a landlord or if you hire a property manager. In either case, specific activities need to take place. You’ll need to locate and screen tenants, create lease agreements, collect rent payments, address lease violations, and handle evictions. However, if you’re a landlord, you’ll be taking that on. With a property manager, you pay someone to handle that for you.
Which approach is best depends on your situation. If you’d rather focus on repairing fixer-uppers to add more properties to your portfolio, getting a property manager gives you more time. If this is your only rental and will remain so, either approach is viable.
Marketing
When you have a rental, you need to get the word out if you’re going to find a tenant. Usually, that means hopping online, going to rental sites, setting up profiles, and adding listings.
If you want your online listings to stand out, you need a solid strategy. For the headline, one solid formula is:
[Price] – # Bedroom / # Bath [Property Type] in [Neighborhood] with [Noteworthy Feature]
With that, you’d end up with something like:
$1300 – 3 Bedroom / 2 Bath Home in Parkgate with Park-Like Backyard Perfect for Entertaining
After that, you’ll need a solid description. Generally speaking, punchy and concise is your best bet, ensuring you quickly highlight what renters want to find. Based on the above example, you may end up with something like:
Spacious Single-Family Home: 3 Bedroom / 2 bath Parkgate home with a park-like backyard that’s perfect for entertaining. Open floorplan and ample parking with 2 car garage. Separate home office. Close to bus line and shopping. Pet-friendly!
Once that’s done, you’ll need to add your contact details and some professional-quality photos from Megan Hannah. Before you take any pictures, consider staging the property. That way, prospective tenants have an easier time envisioning how they’ll use the space.
Along with your listings, use other marketing approaches to broaden your reach. You can start by putting a “for rent” sign up on the property, preferably one with a pocket for rental flyers.
If the local paper is popular, consider placing an ad in the classifieds. Social media — particularly image-oriented options like Instagram — is another low-cost way to market properties.
In your marketing efforts, be sure to include a logo for additional credibility. You can find a logo maker online that’s free to use instead of hiring a designer. You can customize your own design from templates until you’ve created something you’re satisfied with, then download it to use as you like.
Maintenance
With a rental, you’re responsible for ongoing maintenance and repair costs. You'll handle everything in this category if you’re operating as a landlord. From scheduling annual HVAC services to fixing clogged pipes, it’s typically on your shoulders.
If you use a property manager, you’ll have an ally who can help in this department. They’ll be able to coordinate maintenance and repair services, simplifying the process.
The decision between selling and renting your fixer-upper needs to be well-considered. Regardless of your decision, contact Megan Hannah today for assistance with real estate services and photography!
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