There are many factors to consider when making this choice. Many of them have to do with the owner’s current and perceived future needs.
The agents at Rancho Mesa Properties are not financial planners, but to the extent we as real estate agents can help you consider the value of your property, we are ready to help you evaluate your possibilities and plan for your future.
The Capitalization Rate calculator gives a quick read on the economic viability of renting out, rather than selling your house. It divides the net operating income (from renting the property) by the expected sale price of the house, giving you an investment yield. If this yield, also called a “capitalization rate,” is less than what the long-term Treasury securities are currently yielding (around 5.7%) you’re probably be better off selling your house.
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See your Rancho Mesa Properties agent for current rental rates in your area.
Review your property taxes for the major portion of this value. Remember, once you no longer live at the property, you will lose the home owner exemption, a 7% discount on your property taxes. Also, San Diego City levies an annual $55 per unit business tax on each rental property.
This data entry field is for capital improvements and major repairs. Newer properties tend to have very minimal expenses in this area compared to properties that are 15 years and older. If the owner holds a rental property for a long period of time, they will discover that, on average, 10% of their annual rent should be allocated to this category of expenditures.
Include your gardener, landscaper, water, energy, home owner association and property management fees in this data field. Anything that you offer the tenant as a benefit or are committed to pay as an owner on a monthly, or quarterly, basis should also be included.
See your Rancho Mesa Property agent for current property values in the area of your property.
Note: This calculator has no provision for real estate closing costs, which are incurred when you sell your house. To add in this significant factor, subtract approximately 7% from the Likely Sale Price. When Rancho Mesa Properties manages your property there is no real estate closing costs.