My mom, who is 60, lives in OC and owns a townhome. She has a situation with the renters. She doesn’t know whether to just sell or continue renting it out. My mom has several health issues and feels this “rental” is causing her extra stress. I told her to make a pro’s and con’s list of to sell or continue renting, but I don’t know what’s best for her. I could help her with the rental but am thinking maybe she should sell since the market is still decent. I know you may not cover Orange County but I thought I would ask, just in case.
Answer:
Regarding your mom, I don’t know what’s best for her either, but I’ll be happy to share some thoughts. Her situation is one that many of my clients face:
Due to a change (age, illness, less available time, difficult tenants, etc.), managing a rental property has become a burden. Here are her most likely options as I see them, along with some comments:
1. Do nothing
Given your mom’s situation and feelings, that doesn’t sound like the best option.
2. Have you manage the property
May work short term, but wait until there’s a vacancy and you drive 75 miles to meet prospective tenants who don’t show up. Possibility: some managers will find a tenant for you for a 1-time fee of 1/2 to 1 month’s rent. Of course, there’s no incentive to get the best tenants as they’re out of the picture once the tenants move in.
3. Get a professional property manager
Managers charge 5-10% of the rent. A good manager could relieve her stress, but likely decrease her cash flow.
4. Sell
Definitely a stress-reliever. Depending on when she moves out and the amount of her gain (if any), she may be able to sell and pay no tax.
5. Sell and do a tax-free exchange into another property
I’d only suggest this if your mother would be required to pay taxes on the sale. But it probably won’t improve her situation.
I hope that helps. If your mother decides to sell, I can find her a great agent in Orange County.
