If you’re getting ready to move to a new location, you’re likely considering selling your Katy, Texas home. It’s a natural part of the process that most current homeowners go through, and it’s considered to be the only real option. However, the selling process can be time consuming, stressful, and in some cases, unprofitable. It’s not something most people enjoy managing. Are there any real alternatives to selling your Katy home that preclude you from taking a massive loss?
The Problems With Selling
Let’s take a closer look at the main issues with selling:
- Time. While attractive properties may be able to sell in a matter of weeks, some homeowners are forced to wait months or longer for their homes to finish selling. This can create financial and logistical issues as you attempt to get settled into a new property.
- Hassle. You’ll also have to deal with the hassle of preparing your property for sale. Depending on the state of your home, this could mean investing in deep cleaning, painting the walls, and staging the home for viewers.
- Return on investment. Simultaneously, you’ll need to think actively about your financial return on investment (ROI). Are you going to get enough money in the sale to cover your remaining mortgage balance? Will you make a decent enough profit?
Are there ways we can mitigate or even eliminate these problems?
Selling the Property Simpler and Faster
One option is to sell the property in a way that’s simpler, faster, and streamlined. The good news is, Katy is a hot market, and demand is high; if you choose to sell your home in a straightforward way, you might be able to close the deal quickly and get a great price.
However, if you want to sell the property in a simpler and faster way, there are some viable alternative strategies:
- Decrease the sale price. Obviously, this move will reduce the potential profitability of your property, but if you’re interested in selling the property quickly and easily, consider lowering the sale price. In a buyer-saturated market, you should have no trouble getting a quick buyer to take the property off your hands.
- Sell the property as is. If you don’t want to mess with fixing up the property, you could sell it as is. As you might imagine, you’ll need to reduce the sale price to accomplish this.
- Work with a team. You could also work with a team of professionals, including real estate agents, home stagers, and photographers, to make your home as attractive as possible. But you’ll need to pay for these professional services.
As you can see, each of these strategies has some kind of a drawback, but they’re all worth considering.
Converting Your Katy Property Into a Rental
The only real alternative to selling your home is keeping it—and converting it into a rental property. In this scenario, you’ll make changes to the property as needed, find a tenant to occupy your property, and collect rental income on a monthly basis. This allows you to generate passive income in excess of the monthly expenses of the property; in other words, you’ll make a small monthly profit. On top of that, you’ll retain full ownership of the property, so you can continue benefitting from increases in Katy property values.
To do this, there are several things you’ll need to consider:
- Potential rental income. How much rental income would you be able to generate from this property? Look up rent prices in similar properties, preferably in the same neighborhood. What are other people paying for a similar space? You may also consider changing the property to accommodate multiple tenants simultaneously, multiplying the income you can generate from it and hedging against the possibility of vacancies.
- Ongoing expenses. Another major financial consideration is going to be your ongoing expenses. How much are you paying for your mortgage, property insurance, taxes, and maintenance? Ideally, your rental income will be significantly higher than your ongoing expenses. Make sure you’re including occasional breakages and repairs in your estimates.
- Repairs and renovations. Before you can make the property available to tenants, you may need to make some repairs or renovations. Sometimes, this is to make the property safer or more functional. Other times, it’s purely to make the property more attractive to tenant applicants. Common renovations include redoing the kitchen and bathroom, adding parking space, and updating the appliances.
- Landlord responsibilities. Before you get too invested in the idea of becoming a property manager, familiarize yourself with the responsibilities of landlords in Katy. You’ll be responsible for collecting rent and managing tenant applications (and the tenant screening process), but you’ll also be required to keep the property in livable condition for your tenants. That means responding to repair and maintenance requests as needed, which can take a lot of time for some properties.
- Legal requirements and issues. If you aren’t adequately prepared, you may face legal issues related to your property. You’ll need to have a solid lease agreement in place, and if a tenant is destructive or problematic, you may need to pursue eviction. Work with a lawyer to get ahead of these issues before they arise, and understand the potential risks you may face.
- Tax considerations. As a property investor and landlord, there are tax implications you’ll need to consider as well. Generally, you’ll need to claim rental income as revenue, though you may be able to take advantage of many deductions.
- Property management. Hiring a property management firm can help you mitigate many of the issues associated with managing a rental property. They’ll take care of rent collection, property maintenance, tenant turnover, and most other responsibilities, saving you countless hours in exchange for a small percentage of your gross income from the property.