Should I Rent Or Sell My House in Chattanooga?
Hey, folks. Alex Smith here from gkhouses, Chattanooga. I’ve been seeing this question asked a lot in different places, so I want to make a video to help anybody out that is also asking this question. So the question is, “Should I rent or sell my house in Chattanooga?”
I’m not going to convince you, either way, just I’m going to provide you with some things to consider before in order to help you make that decision.
The First Thing You Need To Think About Is, Is My House Going To Cash Flow? (Should I Rent Or Sell My House in Chattanooga?)
So how you would figure this out is, you know, you need to consider all expenses, your mortgage obviously, taxes, insurance, HOA, maintenance.
You need to save a little bit for capital expenditures like… Capital expenditures, if you’re not familiar, is stuff are big expenses that you only need to do, you know, every couple of years, things like a new roof, HVAC, new flooring, that kind of stuff. So you want to save some for that.
Insurance, I Already Mentioned.
Vacancy, it’s pretty unrealistic to be quite honest to expect the property to not be vacant for some period of time.
You’re going to have to spend time finding a tenant, vetting them, screening them, etc.
And then you’ll also want to consider the expenses for finding tenants, whether that’s through a property management company or, you know, having a real estate agent find you, you’ll have to pay some kind of service for screening.
So you need to consider all those things.
Add All Those Things Together! (Should I Rent Or Sell My House in Chattanooga?)
And then, add all those things together, figure out how much you think you could get for your house in rent.
We can help you out with this. A lot of real estate agents can help you out with this as well.
And then you’re just doing some basic math, subtracting your expenses from your revenue.
If you have some leftover, that’s your cash flow. So if the number is negative, obviously, you don’t want to rent the house.
Yeah, you shouldn’t rent the house out if you’re cash flowing. It’s probably better to sell it.
The Other Thing You Want To Consider, That I Forgot To Mention, Is Management. (Should I Rent Or Sell My House in Chattanooga?)
Even if you’re going to be self-managing, you know, eventually it’s probably going to cross your mind to get a property management company involved.
So you’re going to want to make sure that’s accounted for already.
And even if you’re self-managing you can pay yourself that management fee.
They’re typically between 8% and 10%. So you want to make sure to account for that as well. And these aren’t in any particular order either.
The Second One Is Taxes. So I’m Not A Cpa. I Don’t Know Anything About Accounting Really, So Don’t Get Your Tax Advice From Me. (Should I Rent Or Sell My House in Chattanooga?)
But you want to talk to a CPA about capital gains. There are some exemptions that are possible if you’re selling your primary residence.
Whereas, you know, if you rent your house out and you haven’t lived there for a certain number of years and then you decide to sell it, you’ll probably have to pay capital gains taxes.
Again, talk to a CPA about all that kind of stuff. They’re going to be able to provide a better answer for you.
And Then Third, ROI. (Should I Rent Or Sell My House in Chattanooga?)
So how much would you make in profit selling your house versus, you know, cash flow for a year?
If you can make, you know, $100,000 right off the bat with selling a house, probably the better financial move.
But, you know, if you’re not in that type of situation, see what you can cash flow for a year with the house rented and you can, kind of, make your decision that way.
And ROI, by the way, is return on investment. I don’t think I specified that.
Number Four, What Does The Future Look Like For Your Home’s Location? So This Is Pure Speculation.
You know, you might be right, you might be wrong even but, you know, is the area where your house is in growing? Is it not?
And you know, if it is growing, you know, you can have some appreciation if you’re deciding to sell it.
If it’s not really growing and your house is cash flowing, it might be a better decision to rent it.
But, you know, do some research there, figure out what’s happening as best you can with your area and what you think might happen.
Number Five, Can You Handle Tenants? So If You’re Self-managing, This Is Particularly Important.
You know, if you get the right kind of tenant in there, one that you ever hardly hear from, you know, rental houses are a breeze.
And you’ll probably think this is so easy. Why doesn’t everybody do it?
But all it takes is that one problem tenant that, you know, pays late regularly or they have a ton of maintenance requests or they’re super needy.
You know, one way or another, you’ll want to make sure that you have the stomach for that.
Posting Eviction Notices! (Should I Rent Or Sell My House in Chattanooga?)
You also want to make sure that, you know, some things that come with management is posting eviction notices.
You know, I’ve heard of landlords posting eviction notices on Christmas Day.
So, you know, granted that might be a little bit extreme, depending on the situation it might be necessary.
Landlord Comes With That Kind Of Stuff!
But, you know, being a landlord comes with that kind of stuff. So you want to make sure that you’re ready and prepared for that.
But that’s it. If you have any questions, or if I can help you in any way, please feel free to reach out.
Again, my name is Alex Smith. I’m up here in gkhouses, Chattanooga.
You can call me 423-648-7368, extension 3 or you can shoot me an email, whatever’s easiest, firstname.lastname@example.org.
Thanks. See you.