To sell or to rent, that is the question. Sometimes a seller feels like their is no choice, if they can't sell in a very timely fashion then they feel pressure to rent.
Maybe you have already purchased another home, or are relocating out of the area, or you are trying to sell to get out from under a mortgage you can no longer afford.
There are pro's and con's, just like buying vs. renting. But the brunt of the con's fall to the would be seller turned landlord.
In New Milford, CT over the past few years some sellers felt forced to rent. The real estate market just wasn't strong enough and homes were sitting on the market far too long. Many sellers made the painful decision to rent for a while, hoping the market would improve when the lease was up. Some sellers are still facing this decision despite the market improvements.
In theory, it works. In practice, there are many things to consider. And unfortunately the negative side just might outweigh the positive side.
A few things you need to think about before you make that decision to rent.
- First and foremost, make sure there are no restrictions on your mortgage that will prevent you from renting out your home. It all depends on what type of mortgage you have.
- Next, contact your insurance company. You will have to have a different policy and it will probably cost you more money. If you don't think this is important, consider if something should happen and you have to make a claim they could deny it.
- Make sure you require renters insurance policy and that you are a named insured. Ask to see the declarations page at lease signing.
- Are you going to allow pets? Again, check with your insurance company. Many have a list of dog breeds that they will not insure. In Connecticut it is against tenant landlord law to take an additional deposit for pets, but it is acceptable to charge non refundable pet rent every month.
- If you are going to allow pets, make sure you actually MEET the pet. A small mixed breed can end up actually being a 50 pound pit bull mix.
- When you do decide it is time to sell at the end of the lease, I can tell you from first hand experience that trying to set up showings when tenants are involved can be an absolute nightmare. Can you afford to wait until they move out before putting it back on the market again?
- What is your plan if they don't pay the rent? Eviction is a long, costly process here in Connecticut.
- If you have oil or propane heat make sure your tenants are on automatic delivery and that they have a contract on the furnace/burner.
- Take your lease to a real estate attorney to review. Do not take a chance that a boiler plate lease is the right one for you. Protect yourself as much as possible. And while you are speaking to your attorney, ask about the eviction process, just in case.
- Make sure you understand the law all the way around. From the laws on deposits to fair housing laws. The last thing you want to do is to find yourself on the other end of a law suit! Check out the State of Connecticut Website on Landlord Tenant laws. Then familiarize yourself with Fair Housing Laws. These are no joke. Do not just rely on your real estate agent to know the laws!
- Will you need a management company to oversee the rental? That will cost you money too.
These are just a few things you should consider before you decide to lease that house out because it hasn't sold yet. You need to think long and hard about this one before making that decision.
If you did rent your house out, the lease is up and you want to try and sell again, you need to understand WHY your house failed to sell before. Was it because it was not priced correctly for the real estate market? Pricing your home based on what you need to get instead of what the current real estate market says it is worth will certainly prevent a sale. If that was your pricing strategy, I am not surprised you felt compelled to make the decision to rent.
Was your house presented to prospective buyers in the best light possible? What exactly was the marketing strategy? Was it progressive and aggressive? Or was it more along the lines of the 3 P's approach, put up a sign, put it on the MLS, pray.
Want more information about selling your home in New Milford, CT? Check out my website and order a free ebook on my sales and marketing plan, or give me a call at 203.460.1775.
Remember, renting vs. selling carries many, many risks. It is nothing like someone who is trying to decide if they should rent or purchase a home. Once you sign that lease, the tenant has far more protection than you do!
Andrea Swiedler, Realtor, Southern Litchfield County Real Estate
2017 President, Greater New Milford Board of Realtors
2017 Connecticut Magazine 5 Star Realtor
Coldwell Banker Residential Brokerage
Litchfield County Regional Office,375 Danbury Rd, New Milford, CT 06776
© Andrea Swiedler 2009 - 2017
Always do right. This will gratify some people and astonish the rest. - Mark Twain