Should I Rent or Sell my Coconut Grove Real Estate?
Should I rent or sell? A guide for home owners in Coconut Grove
Many homeowners are thinking of downsizing or upgrading to another property. Once owners make the decision to move on, they often wonder whether it is better to hold on to their current property or to sell it right away. There are many factors that affect this decision and this blog will discuss whether it is better to rent or to sell your Coconut Grove property.
To Sell or to Rent a Property | Questions to ask
- Is the market going up or going down?
- In an upward market it is better to rent the unit until the market is about to reach its peak. This provides you with a nice asset appreciation, which adds to your cap return. One big question that owners have is ‘If I wait can I sell the home for more later on?” With this in mind we often ask questions to ourselves like: “What could hurt the market?”: Certainly raised interest rates, reduced benefits for homestead exemption or “What helps the market”? Such as tax incentives for high tax states like NYC, and California.
- In a correcting market, depending on how heavy the correction is, one should decide between holding on to the unit a bit longer or selling it right away before the market shifts from “Oversupply” to “Recession”
- What is the condition of my home?
- If your property is really nicely done, the premium you get when selling can disappear if tenants don’t like looking after it, and it devalues the product.
- Is it the ideal ‘rental property’?
- Some homes lend themselves to great returns while others are limited. Tenants don’t value property in the same way that end-users do. For example, end-users will value condo elevations, finishes, views, HOA fees and financial stability of a condo much more than renters do.
- Are there better properties to buy to get the same return or better, and put more money in your pocket?
- Here is an example: If you own a home of $2,5M, you should get a $15K monthly return on your rental (Rule is $6k return per $1M invested). If you won’t get that (lets say you get $11K) is it not better if you could own two townhomes for $1M a piece and get $6k per month from each one plus $500k in your pocket or a third property that could yield you $3,000 per month. The other element that is worth to be aware of is that owning the investment property is also about asset appreciation. In the lower price markets we cannot un-typically experience a 10% increase in home value over a year, while the upper market experiences a totally static market. Typically, bigger homes appreciate slower than entry level homes ($1m). Let me give you an example to explain. If you rent a big home for 3 years and get $12,000 per month but the value changes marginally from $2.5m to $2.7m over 3 years you only make $200,000 on appreciation when you sell. If you were to buy 2 x $1,250,000 homes they could quite easily appreciate from $1,250,000 to $1,600,000 over 3 years, which provides a profit of $700,000. Obviously you are $500,000 better off with the latter option.
- How do you feel about being a landlord?
- How do you feel about a late night call “The air-co is broken” or “The washing machine is leaking”. Homes are far more complicated propositions than condos. They certainly draw better income, but they are more ‘labor intensive’ . Houses have way more moving parts than condos, so you have to be ok with handling issues
To rent or to sell my Coconut Grove Home?
The 2018 Coconut Grove Real Estate market is a bullish market. We see low months of inventory and rising or steady price levels. This combination is very promising for sellers. The low months of inventory means that there is more demand than supply and prices are likely to rise. This means we are in an upward market cycle, which is positive for both the sales as well as the rental market.If you could get a good rental price for your property ($6,000 rental income per $1M investing is our rule of thumb) then this will be a good form of income while you wait for your property to appreciate. Your final decision should mostly be based on the other factors mentioned above. Are you willing to be a landlord, is your property a rentable property and will your property value not suffer too much from renting it out. Please contact me for a personal conversation and to discuss what your home would be worth on the rental as well as on the sales market and what will be the best decision in financial terms.
To Rent or to sell my Coconut Grove Condo?
The 2018 Coconut Grove condo market shows low levels of inventory while the $2M or the luxury market sees slightly higher levels of inventory. This market is seeing the addition of brand new luxury condo units from Grove at Grand Bay and the competition is increasing. Soon new luxury condos such at Park Grove, the Fairchild and others will be added to that mix. The lower-ends of the market saw its prices slightly corrected, while the higher-end of the market saw increasing prices. This higher prices on the luxury-end of the market are caused by the fact that the brand new Grove at Grand Bay has been released and its prices per SF are higher than the prices per SF priorly seen in the Grove.
The Grove condo market is desired. Many people want to live here, but the supply of good quality condos is limited. If you own a Coconut Grove condo of $2M or less you could either rent or sell. Prices are likely to rise some more, given its low levels of inventory. There is a high demand for good quality condos in the $1M – $1,5M range, so if you own a condo in this range you could sell your unit for top Dollar. The condos in the higher-end of the market will experience a large increase of competition with the new wave of ultra-luxury condos. As many people prefer brand new condos, this might have an affect on your asking price. In general we are bullish on the Coconut Grove market. This is one of the healthiest markets you could have bought in and looking at the entire market we are bullish. For a more personalized conversation contact me on my cell or email me and we can go over your options.