Sell or Rent? Deciding the Best Path for Your Luxury Home in Los Angeles and Beverly Hills

Sell or Rent? Deciding the Best Path for Your Luxury Home in Los Angeles and Beverly Hills

Deciding whether to sell your house or rent it out is a pivotal decision, especially in high-demand real estate areas like Los Angeles and Beverly Hills. With more homeowners today contemplating renting as an alternative to selling, it’s essential to weigh both financial and lifestyle considerations that apply uniquely to these luxury markets. Recent data from Zillow indicates that 66% of sellers are thinking about renting their home before listing, up from 47% in 2021. Let’s explore key factors that may influence whether selling or renting is best for you.

1. Is Your Home an Ideal Rental Property?

In a market like Los Angeles, where neighborhoods and buyer/renter expectations vary widely, consider whether your home is well-suited for rental purposes. Beverly Hills properties, for example, attract tenants seeking luxury living, so homes here need high-end finishes, pristine maintenance, and possibly even amenities like a pool or private gym. Also, think about your proximity to the property. Managing a rental from afar, especially if you’re moving out of the city, can be challenging, particularly for homes with unique requirements, like hillside properties in the Hollywood Hills that may need regular landscaping and maintenance. If these factors pose obstacles, selling may be more practical.

2. Are You Ready for the Responsibilities of a Luxury Landlord?

Owning and renting a luxury home in Beverly Hills or Los Angeles entails more than collecting rent. High-end tenants have high expectations, so you’ll need to ensure the property remains in top condition and be prepared to handle calls for maintenance and repairs. Properties in upscale areas are also more likely to require specialized repair work for unique architectural elements, like custom woodwork or imported materials. As Redfin points out, landlords may face unexpected costs if critical systems, like HVAC or plumbing, break down. If managing these responsibilities sounds burdensome, or if you prefer not to handle tenant relations, selling might be a better fit.

3. Understanding Costs in High-End Markets

While renting can generate passive income, luxury properties in Los Angeles come with unique costs. Here are some key expenses to consider:

• Mortgage and Property Taxes: Even if your rental income covers most of your mortgage, Beverly Hills properties have high property taxes and may require significant income to offset monthly expenses fully.
• Insurance: Landlord insurance is essential for rental properties, especially luxury ones. It costs about 25% more than standard homeowners’ insurance but covers rental-specific risks, which is crucial in earthquake-prone Southern California.
• Maintenance and Repairs: Plan for regular maintenance on luxury finishes and landscaping. Beverly Hills properties, in particular, might need higher upkeep budgets to maintain their pristine condition.
• Tenant Placement and Vacancies: High-end properties often take longer to rent out, which can result in vacancy costs. Marketing costs and screening for reputable tenants are also essential to maintain your property’s value.
• Property Management and HOA Fees: If you opt for a property manager to handle luxury leasing, expect to pay about 10% of the rent for their services. Additionally, many gated communities in LA and Beverly Hills have HOA fees that cover maintenance and amenities but add to your expenses.

Selling in a Strong Market vs. Long-Term Rental Income

Selling in today’s market allows you to capitalize on high home values in Los Angeles and Beverly Hills. However, keeping the home as a rental provides the potential for long-term wealth building, especially as property values in these prime areas typically appreciate over time. Renting can also allow you to retain ownership and potentially leverage the property for future investments. Working with a local real estate agent can help clarify which option aligns best with your financial goals and lifestyle preferences.

Bottom Line

Whether to sell or rent out your home in Los Angeles or Beverly Hills depends on your financial goals, lifestyle needs, and willingness to manage the complexities of luxury rentals. Let’s connect to discuss your options and help you make a well-informed decision in this dynamic market. Whether you’re leaning toward selling for a quick return or exploring rental income potential, I’m here to guide you every step of the way.