Cash flow and tax implications drove our decision to sell, not rent.
When it comes to owning real estate, my wife Krystal and I have learned a lot through our investment journey. One of the most frequent questions we get is why we decided to sell our previous home instead of renting it out. Since we’ve built duplexes and own apartment buildings, people often wonder why we didn’t keep our old home as part of our portfolio. The truth is, the decision came down because of these three factors:
- Tax implications. Selling our home, which was never a rental property, gave us a rare opportunity to avoid capital gains tax. By selling before turning it into a rental, we were able to keep 100% of the profit, something we wouldn’t have been able to do if it became a rental property. That extra 20% of earnings was a big motivator.
“By selling, we were able to free up cash for better, more profitable real estate investments.”
- Cash flow. We had already purchased a new home, but we needed to replenish the cash we used for the down payment and planned upgrades. Selling the old property allowed us to free up the funds we needed to invest in our current home and make it the way we envisioned.
- Expensive single-family homes don’t make good rentals. From my experience, they have higher maintenance costs, longer vacancy periods, and fewer potential renters. Plus, the cost of repairs and upkeep on a larger property can quickly eat into any potential rental income. Instead of holding onto one expensive property, we preferred to sell it and reinvest the proceeds into two smaller homes or a multifamily property, which is a much smarter investment strategy.
If you’re considering selling or renting a property and want someone to guide you, you can call or text us at (571) 210-1818. Real estate is all about making the right moves, and we’re here to help you make the best decision for your situation.
