How to Determine if You Should Rent or Sell Your Colorado Springs Property

Rent or Sell your Colorado Springs Property

One year after the worst of the COVID-19 pandemic, Colorado Springs, like much of the country, is enjoying one of the hottest housing markets in history. Single-family homes sell almost immediately, and owners are pleasantly surprised to find themselves with more profit than they imagined. The shortage of housing has inspired a building boom, but developers can’t seem to build houses or multi-family properties fast enough to meet demand.

All of these factors would tell you that it’s an outstanding time to sell your Colorado Springs property.

Unless you’re looking for a long-term investment opportunity.

Even in a market as crazy as this one, there are many good reasons to rent your home out instead of selling it. If you’re moving into a new home (how did you ever find one?) or relocating out of town for military orders or a new job, you’ll have to decide whether you want to sell like everyone else or hold onto that piece of property for the future.

We are helping owners decide what to do with their property and whether it makes sense to sell it or keep it and rent it out. The ultimate decision, of course, will depend on you and your financial status. Selling or renting comes down to working with what you have and what you plan for the future.

Reasons to Sell Your Colorado Springs Property

Selling can seem obvious for a lot of reasons. You’re likely to get more than your asking price when you place your property on the sales market today. In fact, it’s possible you’ll have a bidding war between potential buyers, driving your price higher and higher. A lot of buyers are making cash offers and many of them are willing to waive inspection requirements. It’s madness, but it’s also a good opportunity for homeowners who want to walk away completely from their homes and pocket a good sum of money.

Here are some of the best circumstances in which you’d want to sell your property and be done.

You Don’t Want to Worry About Tenants

Many landlords will tell you that rental properties are great except for the tenants. It’s hard to get cozy with the idea that someone else will be living in your home. Your tenants may not have the same standards of cleanliness as you do. They may have pets that scratch floors and dig up yards. Perhaps they’ll be less gentle with your property and its appliances and systems, creating faster wear and tear and deterioration. You might have property damage left behind after the tenants moved out, even if they were well-screened and paid an adequate security deposit.

Tenants can easily be managed when you work with a Colorado Springs property management company. With good property managers, you won’t have to worry about dealing with your residents and you’ll have the peace of mind that your property is in good, experienced hands and protected from bad tenants. However, if the idea of other people living in your house upsets you, it’s better to just sell the home.

You Need Access to Cash

Selling also makes sense when you need a quick infusion of cash. When the sales market is as strong as it is and home prices are in your favor, selling can be an excellent way to earn money and walk away from the responsibilities that come with owning a property. Maybe you need the money you’ll make on a sale to send a child to college or put a down payment on a new home. Perhaps it’s time to travel the world or buy a new car or invest in other opportunities or begin your retirement.

Whatever your reasons for needing a predictable sum of money, selling your property can deliver that. If you have enough equity in the home and you know the sales market will deliver the price you want, selling is an easy way to move on.

Your Property is Older

To effectively rent out your home, the rental value has to be enough to make the proposition worth it. You also have to know you won’t be spending thousands of dollars every year just to maintain the property. Older homes typically require more maintenance and frequent repairs. That’s something that may encourage you to sell rather than rent your property.

The easiest properties to rent out are those that are newer or have been well-maintained and updated. If your property still has its original roof, furnace, water heater, and appliances, you’ll likely have to replace those items while you’re renting it out. There may be a lot of cosmetic work that needs to go into making the home attractive to tenants as well. If you aren’t interested in making these investments to keep your property habitable and appealing, selling it is better.

Reasons to Keep and Rent out Your Colorado Springs Property

You’ll likely need some very good reasons to not sell your home in a market like the one we’re currently experiencing. Luckily, we have some of those very good reasons, and here they are.

Demand for Well-Maintained Rentals is High

Lack of inventory isn’t just a factor on the sales market, it’s also leading to an increasingly competitive rental market. This has driven rental values up, and if you decide to rent out your home, you’ll find you have a stable pool of well-qualified tenants who are willing to pay top dollar for a great rental home. The local economy is strong and backed by our military presence and a lot of emerging companies and industries that are moving away from the coasts and into markets like Colorado Springs.

You’ll Become a Real Estate Investor

Perhaps you’ve always wanted to invest in real estate but never really felt like you had the capital or the knowledge to get started. When you own a piece of property already, it’s an easy way in. Keeping your property as a rental will allow you to stay present in a growing real estate market. You’ll have a valuable asset that’s appreciating over time while your tenants pay down your rent and contribute to expenses like property taxes and insurance. If you can rent your home out long enough to have the mortgage paid off completely, all the income you earn on the sale or the rental of that property is pure cash flow. That’s a great place to be.

You May Need the Property Again

If you’re relocating out of the area and you’re thinking there’s a chance you may come back, keeping the property and renting it out is a great option. Who knows what the market will look like in a year or five years or 10 years. Trying to buy a new home in Colorado Springs at that point in the future may be nearly impossible for any number of financial and logistical reasons. By keeping your asset, you know you’ll have a place to live if you need it. That’s one of the benefits of real estate investments – it’s real property and tangible, unlike stocks.

Rent Your Home for a Better Tax Situation

Selling your home for a lot of money is all well and good until the tax bill comes. You’ll likely face a hefty capital gains tax on the property when you sell it. But, when you rent out your home, there are many tax benefits you can take advantage of. You’ll have to declare your rental income when you file, but you can offset those gains with the losses inherent with rental properties.

You can deduct the home’s depreciation, which is pretty generous by IRS standards, and you can also deduct any expenses associated with the home, such as maintenance and professional services like accounting, legal fees, or property management. You can deduct the interest on your mortgage. These write-offs help to reduce your overall tax liability.

Working with Colorado Springs Property Managers

Deciding to rent out your property will require the help of professional property managers, especially if you’re moving out of the area. Property managers can help you effectively lease, manage, and maintain your rental property. There’s no need to agonize over finding a tenant, collecting rent, making sure the home is well-maintained, or dealing with legal complexities and liability. Property managers do this every day for owners just like you. When you decide to rent out your property, contact a Colorado Springs property manager right away. You’ll need to know how much rent you can expect to earn and what you may need to do to prepare the property for the rental market.

We’ve talked about elements that are relevant to almost anyone facing the decision to buy or sell, but your decision is personal. Your needs and goals are unique. We’d be happy to talk about the circumstances driving your dilemma about whether you should sell your property or rent it out. Please contact us at Empower Realty Team. We lease, manage, and maintain investment properties in Colorado Springs, Monument, Castle Rock, Parker, and Aurora.

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