Not too long ago, selling your home was as easy as listing it on the market and waiting for the offers to roll in.
Things have shifted economically, however, and the sales market seems to have peaked.
With rising inflation and higher interest rates, selling a home is a bit more complicated. Buyers are losing interest because mortgages are more expensive, and you won’t have competing offers that are higher than your asking price like you might have a year ago.
Selling isn’t your only option. You can rent your property while you wait for the sales market to bounce back. This is an excellent opportunity to earn some recurring monthly rental income while your tenants pay down your mortgage and your property continues to grow in value.
Talk to us at RiverTown Realty. We have experience leasing, managing, and maintaining properties for owners who haven’t been able to sell. We’re happy to offer the guidance you may need in shifting from the sales mindset to the rental property mindset.
On our website (https://www.myrivertownrealty.com/), we have a handy Rent v. Sell calculator that you may find helpful when you’re deciding where you have the best chance to make the most money.
Let’s take a look at some of the reasons it’s a good idea to hold onto your asset and rent it out.
Understanding the Memphis Sales and Rental Markets
To effectively leverage the property you own, you need to understand how current economic conditions are affecting the Memphis real estate market. We are still enjoying a competitive market with higher than average sales prices and home values. It’s still possible to sell your home and make some money.
The difference now is your buyer. With the Federal Reserve raising interest rates again on November 2, and indicating that additional, smaller increases should be expected in the future, it’s more expensive for buyers to obtain home loans. Therefore, they won’t be willing to overspend on the house they buy. A lot of buyers have decided to put their home buying plans on hold.
Many real estate investors interested in Memphis properties can pay in cash. That’s going to help you if you cannot rent out your property now and you absolutely need to sell. Cash buyers aren’t concerned with the rate of interest on a home loan. They may not require an inspection or an appraisal either, which means you can close your deal faster.
Prepare to negotiate, however. Your cash buyers understand the leverage they have, and they’ll potentially be looking for lower prices than what you’re asking.
The rental market, in contrast, is incredibly strong. All of those home buyers who are putting off their plans? Many of them will remain in the rental market. The large pool of tenants and the demand for well-maintained rental homes in Memphis has pushed rental prices higher. Landlords and rental property owners are earning more than they ever have on Memphis rents. They’re also enjoying a low vacancy rate and a high retention rate. Tenants are staying in place, even when the rent goes up at renewal time.
Why Should You Rent Out Your Memphis Home?
If you cannot sell your home right now in this market, you should rent it out. Some of the benefits to renting your property include:
- Your property will continue to appreciate in value as you rent it out.
- Your tenants will be paying down your mortgage and contributing to your expenses.
- You’ll build more equity while you rent out your home.
- You’ll collect a monthly rent check.
- You can benefit from tax breaks and write-offs.
If you’re not sure you ever envisioned yourself as a landlord, don’t worry. When you partner with a Memphis property management team, you don’t have to worry about the leasing, the management, or the maintenance. We take care of all those things for you, with our experience, our systems, and our resources. We’ll protect your property, develop good relationships with tenants, collect rent, enforce the lease, and make sure your asset continues to grow more valuable.
Renting Out Your Memphis Home: Getting Started
There’s not much you need to do once you decide to rent your home, instead of trying to sell it. You’ve probably made a lot of repairs and cosmetic improvements since you were thinking about selling. We’ll take a look and make sure it’s going to appeal to Memphis tenants. If we recommend any additional upgrades or cost-effective renovations, it’s because we know what will help you earn more rent and attract better tenants.
We’ll talk about what you’re likely to earn in rent, and what you can expect to pay in expenses. While you’re setting yourself up to earn regular income, you’ll also have to be prepared to pay for things like minor repairs, emergency maintenance, and preventative services.
Marketing your property for rent will include professional-grade photographs, a concise and compelling description, and a listing that shows up on all the most popular rental sites. We’ll post it on our own website as well and share it on social media. It won’t take us long to find a qualified resident for your home.
Once a tenant is in place, we’ll take care of the day-to-day activities that go with successfully leasing your home. We’ll keep you in the loop, track all of your income and expenses, and continually evaluate the market as well as your own financial and investment goals. You might be ready to sell the home again in just a year or two. Or, you could potentially determine that you like the investment income that comes with renting out a property and we’ll talk about long-term strategies.
Whether you know what you want to do or you’re still deciding, get in touch with us at RiverTown Realty. We know the current market can be confusing, and as we head into 2023, we’re here to offer all of our professional experience, resources, and support.
Inflation isn’t going away any time soon, and interest rates won’t be coming down. Prepare yourself, and make sure you know what this means for the home you want to sell. We can help. Contact us at RiverTown Realty.