Most New Yorkers move away because of various life events. You could be moving into a bigger home because you need or want more space. You might also be downsizing to something smaller in order to be more economical or simply because you do not need that much room anymore. You may also be moving to another city for a change of scenery or a new job.
Whatever reason you have for wanting to move, when you need to leave your home fast, you may be asking whether it is better to rent out the home or to sell it. Before you make a decision and sign any listing agreement, you can ask yourself a few of the questions detailed below in order to help you determine the answer.
Will I ever want to come back to this apartment?
Are you moving because of a temporary job? If so, there is the chance that you may want to come back eventually. If this is the case, then you may want to rent out your apartment for a certain period of time instead of selling it. If you are downsizing or upsizing the space and need the money from the current apartment in order to purchase your new place, then selling my house concept may be your only option.
Can I rent out my apartment? What are the rules for this?
If you are thinking about renting out your apartment, the very first thing that will need to be determined is whether you can sublet or rent the apartment. The rules of the building and the kind of apartment you have will be the determining factor.
Owners of co-op apartments will first need to look at the sublet policy. These co-op buildings are famous for having strict rules when it comes to renting, and some will not allow any sublets whatsoever. Overall, unless you are only going to sublet for a brief period of time, such as a year or two, you will more likely have to sell it.
On the other hand, condo owners are less likely to have any sort of restrictions in place. Because of this, condos tend to be more expensive because of their flexibility. Your condo building might have applications to fill out for renters, but in many cases, this just serves as a formality.
Can I afford to rent my apartment?
There are three things to consider when deciding whether or not you can afford to rent out the apartment:
- Do you need the money that is being used as equity in the apartment for anything else?
- Will the potential rent amount go beyond the expenses for the property?
- Do you have the money reserved in order to deal with any unforeseen expenses and other possible issues of the apartment?
If you need the money you’ll be making from the apartment, then renting is probably not a good idea. In this case, you should get in touch with a real estate agent that can give you advice on the marketing and listing of the property. If you don’t need those funds, you can look at the potential rent you could get for the apartment and compare that against a list of expenses you might otherwise incur in order to maintain the apartment.
In order to determine what the fair market rent is in your area, you can ask your neighbors what they are getting in rent. You can also look online to see what amount of rent your building advertises or get in touch with a local real estate agent to get some advice. After that, you can compare the rent value to your monthly costs. This includes taxes, mortgages, maintenance, common charges, insurance and any other fees that you might get for renting the apartment.
If it is a good profit, then you’re good to go. If you’re only planning to rent out the apartment for a short period of time, you may think about only breaking even since you know you’ll be returning. Otherwise, you should consider selling the apartment if renting is not something that you would profit from.
All in all, just because an apartment may seem to show a profit on paper, it is a good idea to remember that it can take a lot of time to find the first person to rent from you. There is also the risk of turnover of tenants leaving the apartment empty or in need of repair. Be sure you have funds set aside for any of these sudden events.
Is there an advantage tax-wise to renting versus selling?
When you sell an apartment, you will have capital gains depending on your cost, the tax filing status and the amount of any gain. When you convert a primary residence to a residential rental, you have the potential to benefit from deferring the taxes on your rental income. You can do this by depreciating the property over what is considered its useful life. If you’ve been the owner of the property for a long time or have seen a large increase in the property volume, you may need to consider the tax implications of capital gain. Either way, it is always best to talk to your accountant about your tax situation.
Do you want to be a landlord?
Though it may seem lucrative to be a real estate investor and have a lot of properties to rent out, it can cause a lot of headaches. Dealing with tenants can be tricky. They may not always pay on time or they may damage the apartment. You’ll need to be sure that you have some funds to cushion these events just in case. You’ll also want to be sure you have the ability to pay out your mortgage in a timely manner. Having funds for maintenance and common charges is also important. Consider the administrative duties of being a landlord as well.
Could a property manager handle my rental?
A property manager could definitely manage your rental’s administrative tasks. The extra cost of a property manager will also be something you need to keep in mind when it comes to profits.
Choosing whether to sell or rent your apartment can be a long process and a big decision. If you’re thinking about selling your NYC-based apartment, you can get a good understanding of what your apartment is worth through a marketing strategy plan and free home valuation by contacting Fast Cash Any Home.