Four critical things you need to consider when deciding whether to rent.
Should you keep your home as a long-term rental or sell it? Everyone wants to be an investor, but there are some things you should consider when making this decision. In particular, here are 4 things you have to think about when deciding whether to rent out your property or sell it:
1. Consider the tax implications. You don’t generally pay the same taxes on a home sold as your primary residence as you would on a long-term rental. Furthermore, how long are you planning on keeping the home? If you’ll only hold on to it for one to three years, it might be wiser to sell it rather than get longer-term capital gains.
2. Consider your reserves. I like to have about six months of reserve capital for all of my rental properties. You want to have a substantial reserve or a home warranty if you are looking to rent because things do happen.
3. Consider your opportunity costs. In many cases, I find that clients use their home sales to pay off higher-interest debts, which gives them better cash flow than a rental would.
4. Consider being a landlord. Being a landlord takes a special energy that not everyone has and turning a profit often requires hiring a property manager. Are you ready to handle things like tenant turnover?
These are some of the things to keep in mind when deciding whether to rent or sell. Your circumstances will be unique to you, so if you would like to discuss a strategy for your situation or have a house that you are considering selling, please reach out. Give us a call, and we’d be happy to help you out.
