Knox investment property. When it’s time to move on to a new home, homeowners are faced with an important decision. Should you sell your home, or keep it as an income-producing investment property?
This is no decision to take lightly. Real estate is one of the most valuable assets most people own. Leveraging that investment potential is imperative for cultivating long term success.
Before you rush into selling your home, don’t forget to take a deeper look. From the surface, it can seem like selling your home is the best option available to homeowners. You cash-in the property for one large lump sum and walk away – no tenants to worry about, no more property taxes, no more headaches… or so it seems.
In reality, there are many hidden costs of selling a home that substantially deduct from the transaction’s value. To help you make the best decision, Knox is diving into the details. Let’s examine the costs of selling your home versus the costs of turning it into a rental property.
Costs of Selling Your Home
Don’t make the mistake of thinking that you’ll walk away from the deal’s closing having gained the full “price tag” of your home. Selling a home isn’t free. The process is incredibly expensive. The costs of selling a home cut into the profit margin.
In many cases, that one lump sum that sellers were hoping for ends up being much less than they anticipated.
According to Zillow, the transaction costs of selling a home typically equals 44% to 53% of the property’s equity. That means a substantial portion of your home’s profits are consumed in the process of selling. Costs of selling a home include agent fees, closing costs, pre-sale preparations, and more.
Preparing to list your home is an expensive endeavor. Cleaning, staging, repairs, photography, inspections, and home improvements typically cost at least $5,000 – and in many cases, more. Zillow’s Consumer Housing Trends Report calculates that the average preparation costs equal about $7,000.
The final step of the deal is the most expensive. Closing costs vary deal-to-deal, but they are always at least 7% of the property’s selling price.
Commissions due to the real estate agent are usually 5% to 6% of the home’s selling price. Additional baseline fees, including taxes and attorney costs, consume another 2% to 4% of the deal’s profits. Zillow reports that the average closing costs for sellers in the U.S. range between $17,000 and $22,000.
All this, combined with the expenses of buying your next home and covering moving costs, severely undermine the profitability of selling.
Costs of Maintaining an Income Property
On the other hand, homeowners have the option of converting their homes into an income-producing investment property.
Property owners who choose this option skip out on the expensive costs of selling a home. Investment property owners also get to continue building equity in their real estate. Plus, they get the added bonus of watching their investment value increase over time.
Converting your home into an income property is not nearly as expensive as selling your home,but it still accumulates some bills. Renting out your home requires insurance payments, property taxes, maintenance costs, leasing and marketing fees, and property management costs.
When approached in the traditional way, the costs of renting out your home cut into the investment’s profit margins. While it’s not as severe as selling, it is still something to keep in mind.
Never Sell Your Home with Knox
We’ve just outlined the financial implications of selling your home or keeping it as a rental property. As in any situation, there are ups and downs to both choices. But, what if there was a better way?
Thanks to Knox Financial, there is. The Knox strategy says to never sell your home – turn it into an income-producing investment, instead. Knox also says not to throw away your profits on costly property management and other fees. When you choose Knox, you’re opting for a truly frictionless real estate investment.
Knox Financial dwindles the cost of owning an investment property to one affordable flat rate. Knox handles everything for a fixed fee of 10% of the rent collected. There are never any added fees or expenses. At the end of the day, all it takes to manage your investment with Knox is the cost of our service. It’s never been easier to own a market-beating investment property.
Say hello to frictionless homeownership with Knox Financial. Visit our website to learn more.