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To Sell or Lease? That is the Question!

By
Real Estate Broker/Owner with Carlson Properties 325-721-2429 0528582

 To Sell or Lease? 

Leasing a Home is an option that many sellers are considering particularly when the house will not sell for what is needed to cover the cost of selling.  

Leasing is not without its risk. 

If upgrades have already been made, the upgrades will not be so fresh in one to two to three years when you do decide to sell.  In fact there is the chance, new investments will have to be made to bring the house to the same quality as before the tenants.  The house may have to be repainted and recarpeted prior to selling.

However if the leasing of the home covers your carrying cost of the home, the seller stands to gain because of the tax advantages of elgible deductions such as mortgage interest, repair items, and depreciation.   

Take into account that there is a vacancy cost.  If a tenant moves out and it takes you a month to get a new tenant moved in, that is your vacancy cost.   

Not everybody wants to be a landlord, however.   Hiring a property manager is an option and that means that the management fee needs to be considered as well.  

Then there is what will make you sleep well at night facter.  Do you want to continue maintaining your property and all that entails while it is occupied by a tenant?  If the uncertainty makes you nervous or you simply can not risk unforeseen repairs, then selling now even might be your best decision.

 

 

 

 

 

Posted by

Staged LogoAsp Logo

Beverly Carlson,  REALTOR, GRI, ASP, IAHSP, RESA

Broker

Carlson Properties           

Abilene, Texas

325-721-2429

To See Abilene's Staged Homes, go to www.stagedhomes.com

Jon Quist
REALTY EXECUTIVES ARIZONA TERRITORY - Tucson, AZ
Tucson's BUYERS ONLY Realtor since 1996

Sometimes neither choice is desirable, but a lot of homes are underwater and the owners just would not qualify for a short sale.

Their only viable action is to lease the house, along with all the pitfalls inherent in that action.

Apr 09, 2011 06:01 PM
Carla Dimond
CATARRA - Mountain View, CA
(Silicon Valley)

Beverly, it is a tough decision but for many home owners leasing makes sense

Apr 09, 2011 06:03 PM
Donald Reich
Madison Specs - New Rochelle, NY
Cost Segregation Specialist

Great post. Lots of homeowners think that leasing is a great option if they cannot sell, and just want to postpone their sale by a year or 2. But like you said, it brings with it all sorts of problems, and could make that future sale much harder!

 

Apr 09, 2011 06:17 PM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Very well done.  It is the maintenance and the carrying costs that many do not figure.

Apr 09, 2011 06:18 PM
Mike Mayer
Mike Mayer, Broker/Owner - i List For Less Realty, LLC - Lafayette, LA

And then there's the Lease-Purchase option.

Apr 09, 2011 08:08 PM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Beverly * I disagree with the "freshness comment"....I often have owners return to properties that are in BETTER condition than when they left....Their carpets have been professionally cleaned, the yard has been maintained and the home looks BETTER than when they left because of MY STANDARDS of CLEAN for MY RESIDENTS.....DIY landlords who do not know how to "set the bar" on cleaning or the rules of the holding of security deposits in their state may suffer this; however, professional property managers do.

Apr 09, 2011 11:22 PM
Dan Edward Phillips
Dan Edward Phillips - Eureka, CA
Realtor and Broker/Owner

Good Morning Beverly, good input for the home owner on leasing.  Best wishes on 100K!

Apr 09, 2011 11:47 PM
Beverly Carlson
Carlson Properties 325-721-2429 - Abilene, TX
Abilene's Staging Realtor

Jon, leasing does have pitfalls but a good paying tenant can also keep a homeowner afloat.

Carla, I agree leasing makes sense for some homeowners.

Don,  Thanks for your comment.  Yes leasing is a great option.

Tim, yes,  maintenance and carrying costs still remain with the owner.  

Mike, lease purchase  ia an option, yet the owner still has the same risks of maintenance and carrying costs.

Apr 10, 2011 03:44 AM
Beverly Carlson
Carlson Properties 325-721-2429 - Abilene, TX
Abilene's Staging Realtor

Wallace,  I want your tenants!  Actually I have  some great tenants.  Even so, then there are those others... 

Good morning Dan,  thanks for your comment and the best wishes on 100K  --- almost there!!!

 

Apr 10, 2011 03:52 AM
Mel Ahrens, MBA, Kelly Right Real Estate
Kelly Right Real Estate - Hood River, OR
Customized Choices for your Real Estate Needs

Another consideration is the tax treatment, for the leasing period as well as the impact upon selling.

Mel

Apr 10, 2011 10:16 AM
Beverly Carlson
Carlson Properties 325-721-2429 - Abilene, TX
Abilene's Staging Realtor

Mel,  good point is to undertstand the tax treatment of the sale.

Apr 10, 2011 01:32 PM
Maureen Bray Portland OR Home Stager ~ Room Solutions Staging
Room Solutions Staging, Portland OR - Portland, OR
"Staging Consultations that Sell Portland Homes"

Beverly ~ These are all good points to keep in mind when trying to decide whether to lease or sell.  (And particularly timely for me to read right now, since I have to make this decision very soon.  I'm leaning towards selling, but will keep the lease option in mind if it doesn't sell in a certain period of time.)  Great post!

Apr 25, 2011 03:32 PM