Rent, sell or hold? What to do with your vacant apartment?
“Dear Mr(s). Seller: we cordially invite you to celebrate today’s sellers’ market.” This may as well be written on the dozen+ postcards you’re likely getting from brokers old and new. You are officially in the enviable position of calling your shots (at least for the time being) so call them wisely. If you are the proud owner of a property you are not occupying, you have a fundamental choice to make: hold vacant, hold to rent, or sell. Let’s take a look at what supports each of these decisions, and how to make sure you make the right one!
- Hold vacant: May God continue to impart blessings upon you. Should you find yourself in the position to continue holding on to your property, in this market, not occupy it and not rent it, then you likely have a villa in St. Barth’s, a humble but respectable chateau in Bordeaux, and perhaps a modest condo in Tokyo. Your property is either a pit-stop for you along your journeys, or a place of solitary refuge as you pen the next chapter of your third novel. May we suggest fractional private jet ownership, if you don’t already have one?
- Hold to rent: This option suits very well those who are in it for the long term, those owners who don’t have the need or desire to sell in the coming year or two. If your time horizon is 7+ years, then renting in this market is a solid choice, benefiting from an ever-strengthening rental market driven by a growing urban population seeking to live and work in one of the most desirable cities in the world. Yes, there are transaction costs to renting and tenant turnover, along with maintenance upkeep, but the returns should still render the choice worthwhile if the rent that your apartment generates covers your carrying costs over time.
- Sell: Most seasoned investors will tell you that investment returns are incredibly sensitive to their timing. Generally speaking, peaks and busts, otherwise known as good times and bad times, tend to be shorter in nature than we might think. Therefore, returns that you might generate at any point in time could vary dramatically based on moving the time period up or back only a few years. Why do we take the time to share a 101 on investments? Because you don’t know what the market will be like in 1-2 years. The short term tends to be more volatile than the long term, as evidenced by the length of the most recent peaks and troughs of our very own NYC real estate market. Therefore, if you think you’re going to sell in the next 1-2 years, we argue that there’s no reason to wait any longer, and that you should sell now.
We believe that wisdom lies in tempering what is known today with what could be tomorrow. Investor wisdom lies in looking around you and asking “What’s everyone betting on right now? What’s everyone assuming? And what would a contrarian do?” Were this the case more often, fewer would suffer in any downturn and more would gain instead. And should this be the case for you now, give us a call and let’s partner in selling your property this year.
