Northern Colorado, known for its diverse landscape, booming economy, and vibrant local culture, is one of the top-rated places to live in the U.S. It's the perfect blend of a thriving job market, top educational institutions, and an enviable lifestyle with abundant outdoor activity options and a flourishing art scene. Given these perks, it may seem tempting to cash in by selling your property in this hot real estate market. However, there are a wealth of advantages associated with renting your Northern Colorado property instead.
Advantages of Renting Your Home
Steady Cash Flow
Renting your home can provide a steady stream of passive income. The average rental prices in Northern Colorado have seen a steady upswing over the years due to increasing demand, notably from the robust workforce. This supplementary income can serve as a financial cushion and help in balancing your personal budget.
Positive Market Trend
The population in Northern Colorado is projected to grow rapidly in the ensuing decades. This population influx is likely to increase the demand for rental homes, translating to higher rental prices and occupancy rates. Thus, renting your house could prove to be a profitable decision in the long run.
Potential Tax Benefits
Renting your property could help unlock specific tax benefits. Many expenses associated with rental property maintenance, like costs for repairs, property management, interest on loans, insurance, and depreciation, may all be tax-deductible, thereby reducing your overall tax burden.
Property Appreciation
Real estate typically appreciates over time. However, the appreciation rate in Northern Colorado has exceeded the national average over the past decade due to the region's growing popularity. By renting out your home, you retain ownership, which means you stand to gain from long-term property value appreciation.
Flexibility
Renting out your Northern Colorado home provides flexibility. If you ever decide to return or use the house for personal reasons, it's yours to reclaim. This option becomes significantly more challenging once you sell the property.
Retirement Security
Your rental property can serve as an excellent retirement plan. The steady rental income can supplement your retirement funds. Furthermore, the property itself is a tangible asset that you can leverage in numerous ways in the future.
Downsides of Renting
Renting out your Northern Colorado home is a good idea for many people, for many reasons. However, it can also present various challenges. One drawback is the possibility of dealing with problematic tenants. These tenants might cause property damage, fail to pay rent timely, or even engage in illegal activities within your property. The eviction process can be challenging, and if a tenant leaves voluntarily, you may still need to cover repair costs before the property is ready for the next tenant.
Another downside is the risk of vacancy. This is another uncertainty that might hurt your financial plans. If your property remains vacant for extended periods, you might find yourself shouldering all the home-related expenses without any incoming rent. Furthermore, you will be responsible for ongoing maintenance, repairs, property taxes, and possibly property management fees, which can all significantly decrease your net rental income.
A lot of potential rental-property owners decide not to rent because they don’t want to be landlords - they don’t want to deal with tenants or the hassle and time required. If you’ve had similar thoughts, consider hiring the help of a Loveland property management company. They can shoulder the burden of managing a property and facilitate a flourishing rental property so you can reap the financial benefits without the stress.
Factors to Consider
Before getting too caught up in the decision to rent or sell your property, consider these factors first:
Future Plans
Where do you see yourself in five years? Are you hoping to be in an entirely new home or do you plan on returning to your current home after some time? Regarding financials, are you seeking capital to purchase that next home or are you wanting to create a passive income stream? Consider these points, including your partner and loved ones should they be impacted by the decision, and create a more concrete idea of what your ideal future looks like.
If you’re planning on returning to the home or want passive income, then renting will be a great path to take. Whereas if you want to move to a new home and need capital to make that happen, selling your home might be the best decision.
Market Factors
The external market may also affect whether you rent or sell your property. On one hand, you should learn whether the current housing market is a renters or buyers market. Renter markets are categorized as a high supply of properties with low amounts of renters, therefore driving rental costs downward. Buyer markets are where there are many properties for sale but low numbers of buyers which cause costs to drop. It’s more financially viable to rent your property if there are more tenants than properties available (not a renters market). Similarly, you should avoid selling your home and rent instead if there is a surplus of properties available and limited buyers to compete over (buyers market).
Colorado, and Northern Colorado specifically, is a great market for rental properties. With its vibrant local economy, growing population, and booming real estate market, Colorado is an attractive place for real estate investors. Overall, with the great number of people wanting to move to Colorado, it is a great opportunity to market a rental property.
The Bottom Line
In the current market, it has never been more beneficial to rent your property instead of selling it. For one, Colorado is in a seller market and is primed for new rentals. The current population growth is so high that there are more potential home buyers and renters than there are properties available. This, of course, makes it a perfect time to sell or rent, but renting allows you to capitalize on the passive income that will fuel your next adventure. There is no foreseeable shortage of tenants, and rental rates are only bound to increase in the future.
Specific situations like wanting to move to a new location and needing the capital to purchase a new home give some reason to sell your property. However, the sheer monetary benefit of renting along with the ease of managing your property through a property manager moves the decision in favor of renting more times than not.
If you or someone you know is looking to rent their property and could benefit from working with a Loveland property management company that also serves Fort Collins and the entire Northern Colorado area, contact Black Bear Real Estate and Property Management. Whether you end up buying or selling, choose Black Bear as your partner for all things related to Northern Colorado real estate.