The question we’re debating today is whether you should sell or rent out your home when you are leaving San Francisco. As you consider that question, please take a look at the blog I wrote in February of 2012, which is called “Thinking about Renting out Your Home in San Francisco?” There is a lot of good information in that blog regarding the rent control ordinance and what it means to landlords in San Francisco. I don’t want to repeat all of that information here, but take a look at that past blog to help you understand what you’ll need to be aware of if you do decide to rent your property in San Francisco under the San Francisco Rent Control Ordinance. In this blog, we’re focusing on timeframes, emotional attachments and economic issues to help you make your decision.
If you are planning to sell your home in a year or two you might not want to venture into San Francisco’s rental market. If your home or condo building was built before 1979 then San Francisco’s eviction controls will apply to you. If you’re hoping for a better sales market in a year or two, you should factor in the costs of keeping your home as a rental. You will most likely incur costs to get your home ready to rent and there will be ongoing costs in maintaining your home. Add in management fees, your mortgage, insurance and property taxes and you might break even. Add in the “only in San Francisco” cost of getting a tenant out of your home and it likely will tip the balance.
Ideally you should be thinking in the longer term if you are considering becoming a landlord in San Francisco. If you have a flexible time frame and want to rent out your home for at least three to five years you should probably do very well. Rental properties in San Francisco have been a great investment for many of my clients.
If you are moving away on assignment for a year or two and you want to move back to your home after your assignment is up renting out your home is often the only realistic option. Just be aware of the costs of having an attorney do an owner move in eviction under the rules of the San Francisco rent ordinance as well as the cost of the only in SF “Relocation Fee” that will be due to your tenants (if your home or condo was built before 1979).
Think about the emotional attachment you have to your home. If you love your home and you don’t want anyone to touch it or change anything and you have a particular way that you want it to be, renting out your property is probably not a good idea. Sell it and let it go. Tenants do damage things, they change things, and they want to paint the walls. You have to be able to let go of that emotional attachment if you are going to rent it out. If you cannot do that, renting out your home is not great for you.
The decision to rent or sell your home might be an economic issue. Talk to a property manager like me, and I’ll let you know what I think you can rent out the house for. Then, talk to a real estate sales agent, who will tell you what you can probably sell it for. Also talk to your tax advisor regarding the tax implications. Do the math and make your decision based on economics. I can tell you that in the long term, an investment property in San Francisco can be a great investment.
Hopefully this will help you decide whether to rent or sell. If you have any questions, or you want to discuss your options further, please contact me at Gordon Property Management.