When you have a property that you no longer plan to live in, the natural question to ask is: should I sell it? The other option is to hold onto the asset and rent it out. When you’re making your decision, you have to consider the current market, your plans for the future, and your current financial picture.
Today, we’re talking about the things that we ask our clients to consider when they aren’t sure whether it’s a better idea to sell a home or rent it out.
Do You Plan to Come Back?
If you’re moving out of the area, consider whether you plan to return. You’ll also need to think about whether you’ll have a need for the property in the future. The California real estate market, as you know, can be difficult to enter. Prices are high and down payments need to be at least 20 or 30 percent. So, if you think you might come back to the California City area or you could imagine yourself using the home during retirement or when your children need a place to live, it’s better to hold onto the asset. However, if you’re planning to leave the area and you have no interest in keeping the house for yourself or a family member in the future, selling it might be a good way to tie up all loose ends in the local region.
How Does the Market Look?
When you’re deciding whether to sell or rent, you’ll have to consider both the sales market and the rental market. If it seems like you can sell your home for the price you want, it’s worth considering. However, if the sales market is slow and rents are on the rise, it might be a better idea to hold onto the property and rent it to tenants until the sales market recovers.
Consider Your Financial Situation
Whether you rent or sell your property should depend on the money you have and the money you need.
If you have a lot of equity built up in your property, you can make some money selling the home. This is an attractive idea if you need some cash to do other things, such as pay for college or
buy a new home. However, if you aren’t thinking about selling your home in order to access funds, renting it out may make you more in the long term. However, you’ll need to have a bit of financial security already in order to successfully rent out your property. You’ll need to be prepared to pay for expenses and repairs. Maintenance many need to be done before it’s ready for a tenant. There may be vacancy periods where you aren’t collecting any rent. Make sure you can withstand those financial costs if you decide to rent it out.
When you
rent your property to tenants, you have someone paying down your debt for you. This means you can keep the asset, allow it to continue growing in value, and collect rental income to help you with things like mortgage payments, taxes,
insurance, and investment-related costs. You can also take advantage of tax breaks with a rental home.
When you’re trying to decide whether to rent or sell your property,
contact us
at JBL & Associates. We can walk you through the detailed pros and cons of each scenario, and help you come up with an effective strategy for selling or renting out your home.
