Should I Rent Or Sell My Home? | Real Estate Investing


what's going on guys this is Chandler

Smith and I'm so excited about this

video because I've been getting asked

this question a lot and the question is

Chandler I own a home should I rent it

because I need to move into another

place and I'm not sure if I should sell

my home or rent it the reason you might

be in this situation is either you've

hit financial lows and you're like man I

can't afford my mortgage anymore I'm

gonna go live with my parents or you

found a new home that you want to buy

and you're saying well here's my

situation Chandler I've got this home

I've been living in but I don't think

the market is good right now to try and

sell it so I'm thinking about holding on

to it renting it for a while while I buy

my new home and then maybe selling it in

the future so I want to help you decide

if you should rent your home or if you

should just get rid so with that being

said let's jump into it the reason I

wanted to address this question is I

just ran into it with my brother who

found their dream home they wanted to

buy and they were living in a condo and

they're like hey should I rent out this

condo or should I sell it because I want

to have the cash from selling it however

the market right now with everything

going on isn't great to try and sell and

so what should I do and surprisingly a

lot of people find themselves in this

situation there are also a lot of people

who've come into money and they want to

buy a bigger house but they also want to

own an investment property and they're

saying hey should I just keep this as a

rental and make money off of it or

should I sell it and use that money in a

different investment and so I'm going to

cover all of the scenarios and help you

to decide if you should rent your place

or if you should sell it and use that

money somewhere else now the biggest

thing that's going to help you to make

this decision is you first often need to

decide how much this home is going to be

able to rent for because if you don't

know what it were rent for there's no

way you're going to be able to make an

educated decision the reason that I say

this is if you've got a mortgage of a

thousand dollars and you've got

additional expenses with taxes insurance

everything else of another $400 per

month you're at $1,400

that you're gonna have to pay every

month on this property so if the

property rents

$2,000 this might be a good fit for you

however if the property rents at $1,000

then every month that you rent this

property you're going to be losing money

now this seems like a pretty simple

principle but there are so many people

that are like hey I want to rent my home

that way I can have an investment

property and they don't look at what

their actual expenses are and they just

rent it for whatever they can and all of

a sudden they realize that every month

they're losing money instead of gaining

money and so the first thing I would

tell you is figure out what it rents for

and make sure that you're making money

you have to have cash flow every month

or in my opinion it is not worth holding

onto a property now some other people

might disagree with me they might say

hey if you're in an area where it's

appreciating ten percent every year and

you know this location is just prime and

you want to hold on to that property

because it's gonna sell for a ton in the

future or you want to hold on to it

because you want to gift it to a family

member in the future yeah that's a

different scenario and you've got to

make that decision

but from a money perspective or a

financial perspective where it just

makes sense

do not hold on to a property that is

negative cash flow and that's what it's

considered if your expenses are more

than what rents are bringing in every

single month the next thing you need to

figure out after you've figured out what

it would rent for is what your actual

expenses for sure will be now I just

said you've got your mortgage and your

additional expenses but you've got to

understand there are more expenses that

come when you're dealing with a rental

you're gonna have a management fee if

you have someone else managing the

property you're gonna have your lawn

care which you may have been paying but

you didn't really think of that as an

expense because maybe you were mowing

the lawn on your own so you've got to

remember that's something you've got to

pay for you've got to make sure that

your utilities can be transferred to

their name or if they can't be you've

got to keep paying those and take those

into consideration you've got to think

about the HOA fees and anything else

that might be an additional expense and

then you have to plan for things that

will happen with the property I mean

you're gonna have these little breaks

and problems that will add up while

someone else is renting it

and so you need to sit down with your

management company and say hey what are

these expenses going to be I personally

plan for an additional 12% of my rents

in my rental property that's going to

additional expenses for wear and tear or

breaks that are gonna happen you're

gonna have to call someone up and say

hey can you go fix this in the rental

property so make sure that you know not

only what your expenses were when you

were living in it but what they will be

once you're renting it to someone

because you're gonna have someone else

managing and taking care of them and if

you're gonna manage it on your own you

better do a ton of research to

understand what kind of time commitment

and how much money that's going to cost

so you don't end up saying hey I'll

manage it on my own my expenses will say

the same and you end up in a deep hole

where you're getting paid $5 an hour for

the work you're doing with a little bit

of cash flow that you're getting because

of how often you're having to go over

there and fix stuff up on your property

now once you've gotten all of these

numbers so you can properly analyze your

deal now you've got to think about how

much equity you have in a property and

see what your real return is what I mean

by that is if you own a property

outright you've got $100,000 cash that

owns this property you don't have a

mortgage or anything and your only cash

flowing $100 per month after your

expenses and that adds up to $1,200 a

year you do the quick math on that and

you're saying wow I'm making a 1.2

percent return on my hundred thousand

dollars now that's a very dramatic

over-the-top example however I've seen

people where they've got a lot of equity

in home and their actual return on the

money they have in the home is very very

small when I buy rental properties as an

investment I'm purchasing them and I'm

saying all right I've got 25% down so on

a hundred thousand dollars I've got

twenty five thousand dollars locked up

in this property I want to be getting a

15 to 20 percent return on that money

every single year and so if you've got a

hundred thousand dollars locked up in a

property and you're only getting a 1.2

percent return again in my mind that

investment doesn't make sense now if

you're one of those people that's just

renting to bide your time

because the markets crappy now and you

know in two years we're gonna come out

of all the craziness that's happening

right now and you'll be able to sell it

for a lot more or maybe five years and

you're only getting a one and a half

percent return on it in the meantime

maybe that makes sense to you if that

can turn into a 20 percent return

because the market goes up that much in

two years but that's a decision that you

have to make and you want to analyze it

properly so look at how much equity or

how much money you have in the property

and look at what your actual real return

would be after seeing what rents would

be - all of those expenses that you've

figured out to be able to rent it now

once you have all these numbers you can

make an analytical decision you can look

and say okay this property has $50,000

locked up in it so this will be my

return after all of those expenses and

if it's a negative return maybe you

should sell the property if it's a 1.2

percent return maybe you should sell the

property but if it's a 10% return on the

money you have locked up hey maybe

that's worth holding on to and renting

out for an extended period of time

because where else can you get a 10%

return that will be that easy of a

transition and so once you know all of

these numbers then sit down and say all

right what kind of return do I want on

my money am I getting that return if not

I'm gonna sell it if I am I'm gonna hold

on to it if I am two years from now I'm

gonna hold on to it but now you know the

numbers so you can make an analytical

decision and if you're saying Chandler

I'm way overwhelmed I don't want to

learn all that stuff about renting maybe

you just sell it however if you want to

learn that stuff about renting make sure

that you like this video subscribe to my

channel and hit the little bell button

and then go binge out on all of my

videos because I swear to you two hours

worth of binging my content and watching

the right videos will get you to a place

where you're saying hey I'm totally

comfortable renting this property and I

am ready to rock and roll now again if

you enjoyed this video please make

to push the like button subscribe to the

channel hit that Bell button and if you

want some one-on-one help with me jump

over to my website at Chandler David

Smith comm you can sign up for a

30-minute call and I can answer any

questions that you might have to help

you work through any situation or issues

that you're having thanks so much guys

have a great