When you're ready to move, deciding what to do with your apartment can be a big decision. With New York’s dynamic real estate market, more property owners are considering renting their apartments instead of selling them. In fact, recent data from Zillow shows about two-thirds (66%) of sellers thought about renting before listing, with nearly a third (28%) seriously weighing this option. Compared to 2021, when fewer than half (47%) of homeowners considered renting before selling, it’s clear this trend is growing.
So, should you sell your apartment and use the equity to purchase your next property, or keep it as a rental to build long-term wealth? Let’s explore some key factors to help you make the best choice for your financial and lifestyle goals.
Is Your Apartment a Good Fit for Renting?
Before deciding, it’s important to consider if your apartment would work well as a rental. For example, if you’re moving far away, handling ongoing maintenance could become a challenge. Other factors to think about include the demand for rentals in your building or neighborhood and whether the apartment needs any repairs before it’s tenant-ready.
If these situations resonate with you, selling might be a more practical choice.
Are You Prepared for the Responsibilities of Being a Landlord?
Managing a rental property is more than just collecting monthly rent—it’s a commitment that requires time and patience. You may get maintenance calls at odd hours or discover damages that need repairs before a new tenant moves in. Plus, there’s always the risk of missed rent payments or lease issues that can create additional stress and financial strain.
As Redfin explains:
“Landlords have to fix things like broken pipes, defunct HVAC systems, and structural damage, among other essential repairs. If you don’t have a few thousand dollars on hand to take care of these repairs, you could end up in a bind.”
Do You Understand the Costs?
If you’re thinking about renting for the potential passive income, don’t forget to account for the associated costs. Here are some common expenses to consider:
· Mortgage and Property Taxes: These still need to be covered, even if the rent doesn’t cover all of it.
· Insurance: Landlord insurance typically costs about 25% more than standard insurance and is crucial to protect against damages and liabilities.
· Maintenance and Repairs: Plan on spending at least 1% of the apartment’s value annually for upkeep—potentially more if the apartment is older.
· Finding a Tenant: This can involve advertising costs and background checks.
· Vacancies: If the apartment is empty between tenants, you’ll lose rental income but still have to cover the mortgage.
· Management and HOA Fees: Property managers can help ease the burden, but they often charge around 10% of the monthly rent. HOA fees, if applicable, are another ongoing expense.
Bottom Line
Whether you decide to sell or rent out your apartment is ultimately a personal decision. Weigh the pros and cons carefully and consult with trusted professionals to help you feel informed and supported. Working with a real estate agent can be a great resource for advice on New York’s market, especially when making choices about renting or selling.
Remember, “Who You Work With Matters!” If you need a real estate agent who understands the intricacies of the New York market, I’m here to help guide you every step of the way.
