Should I Sell My Rental Property?
Do you own a rental property that is not performing like you thought it would? Did you think that owning a rental property was going to give you a check in the mailbox with minimal effort required? As real estate investors, we here at FL Home Buyers know the harsh reality of owning rental property. The reality of owning a rental property is not as simple as what you might have thought when you were getting into it. Here are some of the top indicators that it may be time to sell your rental.
Spending More Than You Are Collecting in Rent
Let’s say you own a single-family rental property. Your rental collects $1,100 a month in rent. Your taxes are $3,000 a year, your insurance is $2,000 a year, and your mortgage runs you about $500 a month. Realistically, your mortgage, taxes, and insurance (what banks call PITI) will equate to just about $915 a month. You are profiting around $185.00 a month. That is before the inevitable and dreaded phone call from your tenant that the hot water isn’t working or an appliance needs repair.
Don’t look at just the rental income coming in every month. Add your collected rent up and compare it to the fixed expenses (PITI) and the variable expenses (repairs, maintenance, etc.) to see what the reality of the situation is.
Constant Late Payments
Late payments are one of the most common issues when it comes to owning and self managing a rental property. You find yourself letting tenants fall behind, only to find yourself stressing out and hoping that they can catch back up next month. When next month comes around, do you think they are going to be able to come up with the rent plus what they owed? It is a very frustrating cycle to go through as a landlord.
The best plan of action is to enforce a strict rent collection policy and not budge on it. If you are not willing to do that, you will find yourself dealing with a tenant who never pays on time and will build up a rent balance that they owe you. You may end up having to go through an eviction, which you can read about the process here.
Spending Too Much Time
Time is our most valuable asset and you need to consider the amount of time you are spending on or at your rental property. If you own a few properties or just one multi-family, chances are that you will be fielding a phone call or two on a weekly basis. Have you considered what your time is worth?
Let’s say you are profiting $200.00 a month. You spend 3 or 4 hours a week on the phone with the tenants, dealing with the general duties that come with being a landlord, or cutting the lawn yourself to save a couple of bucks. As a landlord, when it comes down to the calculations you are really only making between $12.00 and $16.00 an hour. $200 a month for 12 or 16 hours worth of work.
If you are considering selling your rental property, there are a few ways to go about it. You can start by reading our article here on what it is like to sell a house with a tenant in it. When it comes down to it, there are two routes. You could go the traditional sale route which would involve realtors, inspections, banks, appraisals, financing, and the rest of the paperwork that goes along with it. Or you could give us a call here at FL Home Buyers where you could have a no-inspection, 7-day close time, no closing cost, cash offer in your inbox within 20 minutes.