Being a landlord means dealing with tenants on a regular basis. Sometimes, if you’re lucky, you’ll have tenants who take care of your property and tell you when something needs to be fixed. However, there’s always a chance that when a tenant moves out, you’ll find significant property damage. In extreme cases, you might find complete destruction.
The question is, should you sell a property that has been destroyed or severely damaged by a tenant? The answer depends on how much time and effort you’re willing to put into restoring the property. Every penny you spend on repairs will offset your profitability. If the damage is too great, you may not recover that amount in profits for many years.
Should you sell a damaged property? Here are some points that will help you make that decision.
1. Do you need cash fast?
One important factor to consider is whether you need cash fast. For example, do you need to pay off your debts? Is the property at risk for foreclosure because you’re behind on your mortgage payments? Do you have an emergency that requires access to cash now?
If you need cash fast for any reason, selling your damaged property is worth considering. However, the best way to get the money you need is to sell your home as-is for cash. This is the only way you can avoid taking the time to fix the damage.
Selling your home for cash as-is will get you the money you need quickly, usually within 24 hours of accepting an offer.
2. Are the repair costs extensive?
How much damage has been done? Do you need to replace drywall, carpets, and repaint? Or are you looking at worse damage like broken fixtures, toilets, bathtubs, and sinks? Is there fire damage? How much money will you need to put into repairs, and how long will it take to complete?
Calculate the cost of repairs and then add the amount of money you’ll lose from a lack of rent while the project is completed. If it’s going to take more than a month to repair the property, and your costs will exceed $10,000, you should consider selling. You can use the money to buy another property that you don’t need to repair.
If you don’t mind making repairs and extending the time it will take for your property to become profitable, then you may want to hold onto your property. It all depends. If your property has a high value, extensive damage might not be a big problem. However, $20,000 in damages to a house that is only worth $175,000 will leave a bigger impact.
3. Is your time worth more than money?
Sometimes it’s not about the money. If you value your time and don’t think it’s worth investing your energy and time into making extensive repairs, you can cut your losses by selling your rental property.
When your property is in bad shape, you won’t get the full value for it, but that’s to be expected. When facing severe damages, you’ll have to spend the time and money to make extensive repairs, so if you can sell your home for less, those repairs will become someone else’s responsibility.
Should you sell? It all boils down to whether you value your time or money more. The cost of securing your time and eliminating stress might be that you lose several thousand dollars when you sell your home, but that’s a small price to pay when you value your time more than money.
4. How big is the setback from the financial loss?
Another important factor to consider is when you’ll recover from the financial setback. Will it take weeks, months, or years? If you’re just looking at replacing carpet, missing appliances, and fixing some holes in the drywall, your recovery will be fast. Your damages won’t cost that much to fix and you can get your property back on the market quickly. However, if you’re looking at serious damage like mold, mildew, and damaged electrical wiring, your setback will be longer.
Crunch all the numbers to find out when your property will become profitable again. If it’s only going to take you several months to a year, you should probably hang onto your property. However, if the damages are severe and in the range of $50,000 or more, you’re probably better off selling.
5. Are you moving far away?
If you’re relocating far away, this could be an opportunity for you to sell your rental property and cut your losses. If you keep your damaged property while living far away, your expenses will only increase. You’ll have to hire a property manager to handle rehabbing the property in addition to your regular property management fees.
It’s hard to maintain a rental property from a distance without hiring a property manager. If you don’t hire someone full-time to take care of your properties, you’ll have to drive or fly back to the area periodically to check up on things. Even then, being absent means you won’t know what’s going on. So right there, moving is going to increase your expenses. Having to fix serious damage will only add to those expenses.
If this circumstance applies, ask yourself if you want to be a long-distance landlord. If you own multiple rental properties, you might not mind having property far away. However, if you only have one property, consider taking the opportunity to sell it and buy another house closer to where you’re moving.
Want to sell your home fast? We’ll buy your property for cash
If you’re looking over the damage left behind by a tenant, and you don’t want to bother with repairs, your best option is to sell your home as-is for cash. At Light Street Residential, we buy homes in any condition, as-is, for cash.
When we buy your home, you won’t have to list, show, or market your property. You also won’t need to pass an inspection or make any repairs. We’ll buy your home as-is for cash and we’ll cover all of your closing costs.
Contact us today and we’ll provide you with a cash offer within 24 hours!