Maybe you’re planning to upgrade or downgrade and move out of your current home. Or, perhaps you’re being sent out of the area for work. You could have inherited a property and you’re not sure what to do with it.
Today, we’re talking about whether you should rent or sell your property. The answer really depends on your financial situation and whether you’re prepared to be a landlord.
Consider Your Financial Situation and Goals
If you need the cash that a home sale can provide, your decision is easy. Perhaps you want to use the equity that’s in your home to send a child to college or buy a new property that requires a large down payment. When selling your home will be profitable and you have a need for the money, go ahead and sell. But, if you don’t need the cash, you might be able to make more money by holding onto the asset and renting it out. There are tax breaks available when you own rental property. And, if the market is not going to allow you to sell for the price you need or want, it’s often better to keep the home and allow it to appreciate while you wait for the sales market to get stronger.
Consider Your Future Plans
Think about whether you’ll ever need this property again. The benefit of investing in real estate is that it’s a tangible asset. If you’re moving out of the area and you never plan to come back and you’re looking for total closure, it’s a good idea to sell. But, if you may return to Vallejo, think about renting it out so you have a home when you come back. Or, if you’re thinking you might want to retire in this property or hand it down to a child in the future, renting it out is the better choice.
Are You Prepared to be a Landlord?
When you sell a home, you are able to walk away from the investment entirely, with cash in hand. But, when you rent out a property, you have to assume a lot of responsibility. You’ll need to find good tenants, keep the property maintained, and cover expenses such as repairs, vacancy, and even evictions and other potential legal fees. It’s a good idea to hire a professional property manager to oversee the leasing and screening process as well as the lease enforcement. Professional Vallejo property managers can help you rent out your home, keep your asset growing in value, and protect you from the liability that often comes with renting out a home.
You can write off the costs of professional management as well as any other professional services you receive from accountants, attorneys, and others. Other tax benefits include depreciation. If you want to sell your current property but buy another investment home, you can defer taxes through a 1031 Exchange.
You have many options, and we’d be happy to talk through them with you. Please contact us at Krystle Properties, and we can tell you more.