Which is Better
To say that Downtown Chicago real estate is hot would be the understatement of the decade. For the past several years, the residential offerings throughout our city’s neighborhoods have been expanding like wildfire — and are being bought just as quickly. So, if the time has come to move somewhere else in the city or outside of it, you might be wondering whether you should sell your condo or rent it out.
Each option has its advantages and disadvantages, and what you decide will have an impact on more than just the days and weeks ahead. Here, we’ll outline the pros and cons of each avenue to help you decide whether you should sell the condo or rent it out.
The Pros and Cons of Selling
Let’s get the cons out of the way. First, selling your condo can take time. Depending on its location, condition, price, and features, your condo may or may not be as desirable as others. Eventually, the right buyer will come along, but when that happens is beyond your control.
Second, selling a condo has both immediate and future costs. Repairs might be needed, and you might need to stage the home. There are fees associated with being a seller in a real estate transaction as well, not to mention the down payment, mortgage fees, real estate commissions, moving costs, and furnishing/decorating costs of buying your next home.
Now, how about some pros? First, you might have to move. Maybe it’s for work or a new relationship. Either way, you have to do what you have to do, and buying a new home can feel like a fresh start or new perspective. That’s rewarding in its own right. You get to experience a new community, a new layout, and more — and that’s all great for the mind.
Financially, another pro is the money you’ll make on the sale of your condo. As you made payments on your mortgage, you built equity. And when you sell, you’ll get that equity back (minus fees associated with selling). That can be a nice chunk of change depending on the terms of your current loan and what you sell for.
Finally, selling your condo means it’s out of the picture. While it can be hard to say goodbye to your home, we all have times in life when we have to let things go to keep moving forward. Selling your condo instead of renting it out releases you from the obligations landlords have.
The Pros and Cons of Renting Your Condo
Let’s follow a similar process here — cons first. Get the bad stuff out of the way. Renting out your condo means you become a landlord with tenants. One of the reasons people rent is for a hassle-free lifestyle. They don’t have to worry about major issues because those issues are the responsibility of a landlord or property manager. And if you rent, they’ll be yours, too. Consider whether you’d have the time and resources to tackle major problems renters might have with your condo if you were to rent it out.
Renting out your condo also requires legal and financial planning. First, you have to determine whether the condo association will even let you rent it out. If they will, you’ll have to find or create a rental lease and rental application, hire an attorney to review those documents, obtain the right insurance coverage, discuss tax implications with a licensed tax professional, identify a rental price, and find a way to conduct background checks on potential tenants. Then, you have to market it to find those tenants. It’s a lot of work.
With that stuff out of the way, what about the pros? First and foremost, renting out your condo provides you with an additional source of income since the condo becomes an investment property. You’ll be able to continue paying the current mortgage and other fees while pocketing the difference. And by maintaining the existing mortgage, you’ll continue to build strong credit. (Note that you may need to contact your lender to discuss whether renting your condo will have an effect on your current loan.)
So, Should You Sell the Condo or Rent It Out?
It’s entirely your decision to make. One might be better than the other for your situation. Now that we’ve outlined the pros and cons of selling a condo or renting it out, weigh your options carefully. Remember, whatever you decide, we’re here to help you sell, find a new home, and even rent out your current condo.