Are you thinking about selling your property for a big payout? Or is it better to retain that property to rent out as a stream of passive income?
To help you make your decision, one thing that you should consider, especially in today’s market, is the current interest rates. According to Mortgage Daily News, mortgage rates climbed to 6.86% as of February 2023, up from 4.01% in February 2022. This increase was a result of the Federal Reserve’s response to contain inflation.
With interest rates having such a major impact on monthly mortgage payments, they should be taken into consideration when determining if now is the right time to sell. Let’s talk about everything you need to know about interest rates and how they can affect your decisions as a West Michigan property owner.
Interest Rates and the Housing Market
Ultimately, interest rates affect the housing market by dictating buyer preference and are determined by the Federal Reserve’s decision. Often, these rates go up whenever the Federal Reserve wants to control macroeconomic events such as inflation.
When mortgage rates rise, prospective homeowners will be looking for more affordable ways to secure housing. Those who can afford to pay increased interest rates can choose to still move forward with purchasing a home; unfortunately, not everyone falls into this category. Those who can’t shoulder the rising rates may choose to rent in the meantime. The result is an increased demand for rental properties. As more people consider renting rather than buying, the rental market will grow. With this being said, it may be a good time to strongly consider renting out your property rather than trying to sell to a dwindling pool of prospective buyers.
High Interest Rates and Property Values — Another Reason to Rent Out Your Property
Your home may be worth less now than what it was worth before the rate hikes due to demands decreasing. Whenever interest rates rise, people tend to hold off on property purchases and, instead, either re-invest in other assets or keep their money set aside in an emergency fund to wait out the “economic storm.”
You may still be able to sell your property; however, you’ll miss out on the profit margins you originally projected because you can only raise your property’s value based on the demand in your area, which we’ve already established may be lower compared to previous years given the rising inflation and interest rates.
With low demand and low property values depending on location, you may decide it’s better to wait out this lull by renting out your property to gain passive income and more equity. Once the rates lower and properties become more in demand again, you may re-evaluate if you’d like to continue having a rental property producing passive income or if you’d like to cash out on the equity you’ve built in the property.
The Value of Property Management in Grand Rapids, MI
Once you’ve decided to rent out your property, the next step is deciding whether you would like to manage the rental property yourself or take a more hands-off approach by hiring a trusted property management company.
If you choose to take a low-stress, hands-off approach, you need a Grand Rapids property management company like United Properties of West Michigan to take on the stress of managing a rental property. Our field experts are here to assist you every step of the way!
Our dedicated team of application underwriters diligently screens all applicants to ensure you’re getting a well-qualified tenant who underwent our extensive background screening process. To do this, we thoroughly review credit scores, potential criminal activity, prior rental history, and employment history, including requiring rental verifications and employment verifications.
Our experience has shown that screening for a well-qualified tenant greatly reduces the risks of unpaid rent, eviction filing, and tenant-related damages.
Everything from tenant calls and questions to inspections to rent readies, our team is ready to handle all day-to-day operations for your property. A tenant locked themselves out in the middle of the night? You got it! A severe storm shattered a window? No problem! The sink is leaking? We’re on it!
Leasing, rent collection, day-to-day maintenance, inspections, rent readies, and so much more. We perform every part of property management for you so you can sit back and relax!
Expert Advice from People Who Know the Local Market
Our team is ready and capable of giving you expert advice about any curiosities or concerns you might have about improvements to do that will increase your ROI, what amenities appeal to tenants most, and anything else to help ensure your success as a property investor.
Reach Out for Reliable and Efficient Grand Rapids Property Management
Ultimately, whether to sell or rent out your home is your call. With that being said, given the current market, we strongly urge you to consider renting out your property to make the most of your money.
When you’re ready to start marketing your property, look no further for reliable, efficient, and friendly Grand Rapids property management. Reach out, and let’s talk about turning your property into a money-making machine this spring!