Want to sell your rental? First sit down and take the time to write an entire list of pros and cons a few months before you decide to officially put your Airbnb/Rental property on the market. Selling a rental or any property is always a big decision. I encourage everyone to write down their own pro and con list. This exercise will help you figure it out by laying out all your concrete thoughts. After doing the Pro’s vs. Con’s exercise, you will most likely be able to move forward with little or no regret.
6 Reasons Why the Rental Was A Good Idea
Besides the cash flow, there were other factors why we made the jump.
1. Bullish Long-term
Generally, once a big city “pops” it doesn’t “un-pop” until the entire industry dies. If you’re telling me e-commerce and cloud computing is a dying industry right now, then…you’re nuts.
2. Rapid Appreciation
As I’m writing this piece the local markets are still hot in the seller’s favor. All of the houses in our neighborhood have gone over 10% to 20% over asking from their market rate asking price. When you see numbers like that year after year, it’s almost too delicious to not take advantage of the leverage. Leverage is a beautiful thing if you can stomach it.
3. Low-Interest Rate
The interest rate for a rental can be around 4%.
4. Stunning & Landmark Historic Neighborhood
Location, location, location. Finding the right property in the right location can be a steal. The only homes that do not sell within the first 2 weeks in this market are the homes that are grossly overpriced and unresponsive to bids.
5. Low Inventory (in our asset class)
Single-family properties are becoming rarer and rarer as builders and developers go for higher profit and build the ever so popular “Jointed Townhomes.” There’s also an abundance of skyscraper condos in the pipeline but not enough single-family homes.
6. Waiting for Developers
The local real estate developers and builders are kindly inquiring if anyone is willing to sell them their run-down property for a quick cash out. You watch how quickly the builders will move, and everything will flip within sight in simply a matter of time.
9 Reasons Why We Decided to Sell the Rental
1. Plans, Plans, Plans
The first you have to ask yourself is what are your long-term plans? It’s important to keep in mind that plans change, needs change, people change.
2. Don’t Want to Be Landlords Anymore
Hindsight is always 20/20 and there’s always a “but” just to make life a little more convoluted. I honestly thought it was going to be more flexible. Being landlords didn’t look as bad at the time (they’ve passed new laws since then though.)
We thought an Airbnb would be different. Short-term rentals have their own pros and cons. The pro is a much fatter cash flow in a large metropolitan city where cash flow is nearly impossible. The cons mostly has to do with the legality and insurance side of it.
3. Reduce Stress
A rental can be stressful and if it’s an Airbnb rental, you can be even more stressful.
4. Keeping Us Tied Down
We don’t want to be tied down and we are thinking about possibly moving, when we’ve never thought about moving before.
5. A Good Time to Cash Out
The rental provided about an extra $20,000 in cash flow while it was on Airbnb, but it was not passive enough or realistic for the long term. We were lucky we got it in when we did, it was a good ride.
6. My Parents Plans
Our parents plans changed, which changed ours.
7. Supply Build Up
There is some oversupply of AirBnB’s in our area. We feel that there is going to be downward pressure on rental demand. I don't want to get caught holding the bag when I know it's coming. Eventually, brighter days are ahead but I don’t feel like braving through the storm when we’re this close to financial independence.
8. New “Unfriendly” Local Laws
This didn’t directly affect us either but was well aware of the new local laws favoring renter protection. One of the new laws that passed last summer no longer allow landlords to choose their qualified tenants. Landlords MUST go by the “whoever qualified first”, it doesn’t matter who else came after more qualified or more fitting.
The first qualifier gets it no matter who they are. I was pretty uncomfortable with that as should any other real landlord.
On another similar note: Airbnb is under-regulated and undertaxed. The city of Seattle has passed new laws for all Airbnb’s inside the city limits which means everything is up in the air regarding profits. Hey, at least it’s not San Francisco, New York or Japan, which has basically banned them completely.
9. Life “Math” Made No Sense
I did feel immense sadness when I was standing in our beautiful rental. I asked my husband if he really wanted to sell it because, after all, we designed and built it out. We made it better! It was perfect for what we needed it for, and it was definitely popular with our guests and a popular neighborhood. But he nodded and I think he’s right he’s almost always right, it’s hugely annoying!
Emotions aside, the math made no sense. I don’t mean math as in numbers but I mean math as in life math, time and distance. We’ve put it way too much of our life/time to make sense of all this. Nothing was working out with it as our future plans changed, personal aspirations changed, time devoted to it, the moment I found better things to do, etc.
You’re Gonna Miss the Money!
Hope not. Some people look back and say, “Oh I shouldn’t have sold it but I never understood that. I don’t really want anything at the end of the day that is going to require me to sacrifice so much. What do you want and, what are you willing to sacrifice to get what you want? That's what it gets down to for me. Sold!