Should You Renovate or Sell Your Old Rental Property in 2023 - Which Option is Best for You
In the immortal words of the clash, "should I keep it or should I sell" is a phrase that has applied to both property owners and investors more than it was initially intended to? With the economy in the current state, you don't want to be the one to make the wrong financial step you'll end up regretting through your life. So, here are a few things to keep in mind when you're considering what to do with the most important assets you can control.
The question of whether you should renovate or sell a property will largely be decided by your goals as an investor and how the property suits those goals.
But first, before you decide whether you should renovate or sell a property, click the link below to book a free strategy call with our mortgage team to discuss how the financial side of your investments and how they can impact your investment outlook moving forward.
Why are you doing this?
Why is an essential factor, has your life changed in some significant way that now leaves you with too much or too little space? Or perhaps you need a change in scenery? Can your requirements easily be renovated into the home? If so at what cost? These are some of the basic points to ponder over before making this decision.
The cash factor
Cash might not be a coined term, but it is one that defines when and why we do most of the things in our lives. Now when considering costs, don't forget to factor in a few extras to cost of simply buying another property, selling and moving to take time and money as well. Renovating, while it might turn out to be cheaper, also means there's only so much you can change about the scenery. So if you're bent on a change of properties, go ahead. However, if you're looking to keep it light on the pocket and your needs can be met with a few small fixes, it might be best just to keep the property.
The work
Well, it is not going to be easy either way, with selling you'll have to keep your house looking all angelic all the time, clean and ensure your tenants are not pestering buyers. If you opt for renovation, you will probably have to live in a debris-ridden wasteland while trying to maintain a regular schedule. Either way, you'll have to put in the work.
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The research
The first thing you should do is find out how much you can get for your house and how much it would cost to renovate. Talk with your neighbourhood realtor to discuss your options and which is most feasible for you.
What's available?
Another wise thing to do would be to check the market. See if you can find a dream home in the range that you’ll get from selling off this one. Or perhaps try mapping out alterations to your current home to convert it into your dream home. Either way, this is not one of those situations where you leap before you think.
The stats
According to the statistics, renovation is a clear winner with around 61% of home-related activity being a renovation, and only 7% were buying/selling. You don't have to stick to the stats though.
How Your Investment Strategy Impacts Your Choice to Renovate or Sell
The decision to either renovate or sell your property will be massively impacted by your goals as a real estate investor. If you are looking to build a profitable long-term portfolio, you need to get reliable cash-flowing properties.
That means if you have a property that is currently cash flowing but simply needs some updates, you should spend the time to renovate and update the property instead of shedding the property and hunting for a new one.
Likewise, you are looking to build equity and leverage, you may want to sell a property that has reached the height of the neighborhoods' property values. That way, you can continue to use and leverage appreciation on new properties that still have enough room to grow.
At the end of it, the choice to renovate or sell is entirely up to you, but if you want to be smart about your investments, you will take your goals into mind every single time. That way, you are not investing in a property that works against your own plans.
So, Should You Renovate or Sell A Rental Property?
This is not a question that anyone can answer for you. Some things like sentimental value also play into the mix. However, with the right research and the proper guidance from professional property advisors, you will be able to make the decision best suited to your needs. While renovating does seem to be the hot choice, you might need changes that renovating cannot cover. If you like the neighbourhood and need that little bit of extra space renovating might be more down your lane. Professionals advise that you remain in the same property for at least three years to break even with the costs of moving and setting up home, so you'd do well to keep that in mind.
Finally, before you decide whether you should renovate or sell a property, click the link below to book a free strategy call with our mortgage team to discuss how the financial side of your investments and how they can impact your investment outlook moving forward.