Moving Out-of-State: What Should You Do with Your Los Angeles Home
Homeowners might need to relocate for various reasons, such as job, health, family or others. The biggest dilemma they face in such situations is whether to sell or rent their Los Angeles property, while moving out of state. Both the options have their own advantages and disadvantages. Selling the property can be beneficial if they want to purchase a house in their new location, while renting it can help them generate consistent passive income for the long-term.
There is no right or wrong answer to this question, so here is a comparative analysis of the pros and cons of selling and renting your Los Angeles home to help you decide what you should do while moving out of state.
Pros And Cons of Selling Your Los Angeles Property
Pro: Covers Moving Costs
Buying a house in a new location is not easy. You will need money handy to pay moving costs, upfront costs, and hidden costs for your new home. In such situations, you have to use the money from that sale to purchase the new property and settle in the new city.
Pro: Saves You from Investment Taxes
Owning one house is in itself a task, as there are ongoing taxes, mortgage payments, maintenance costs, insurance, secured debts for collateral purposes and unsecured debts such as credit card and medical bills. Managing two houses can be even more challenging and selling your previous home can give you some control over the situation.
Con: The Sale-Purchase Process Can be Lengthy
Selling a house is not the work of a day. It can take months to find a good buyer, prepare the paperwork, and close the deal. As you are caught up in moving your own stuff to your new place, it can be very difficult to coordinate two processes simultaneously and you might not get a lot of time to close a good deal.
Con: Missing Out on Rental Opportunities
Home prices in Los Angeles have been consistently increasing over the past years. The city’s vacancy rate has dropped to 4%, which means that places are filling up fast with renters. The net absorption of apartment units and the asking rent have increased every quarter since October 2020. At such a juncture, selling your home now can cause you to miss out on substantial profits in the future, as reinvesting in LA can become very costly very soon.
Pros And Cons Renting Your Los Angeles Property
In our experience, renting is always better than selling because it gives you a source of generating consistent passive income. However, managing a property from a distance comes with its own set of challenges. Here are the pros and cons of renting your Los Angeles home.
Pro: High Rental Prices
The LA rental market offers many financial benefits, one of which is high rental prices. The average median rent in Los Angeles is $2518 in 2021 and is predicted to rise to $2325 by 2023. If your property is located in a good neighborhood, you can easily expect to turn a profit in the next two or three years.
Pro: Increasing Rental Demand
The rental market in Los Angeles is very volatile, but the demand for well-maintained rental homes is increasing steadily. The city has a diverse pool of renters so landlords can be assured of finding the renters they want. Vacancy rates are at an all-time low. Besides, despite rent control laws and the post-pandemic situation, tenants are ready to pay higher rent if the house is worth it.
Con: Managing the Property on Your Own Can Be Difficult
Being a rental property owner requires you to manage rent collection, inspections, tenant screening, maintenance, tenant complaints, utilities and repairs. It can be daunting to manage all of this from a distance, unless you hire a local property management company, who can take care of your home in your absence.
The decision of selling or renting your home is a very personal one. However, instead of deciding anything emotionally, it can be good to consult a property management company to know which alternative is better for you.
MGMT Group, Inc. is a full-service residential property management company with over ten years of experience managing real estate throughout the Los Angeles area. We take a proactive approach while managing our properties and believe in working intelligently to provide better results for client portfolios.
For more advice on what you should do with your Los Angeles property, connect with us.