Selling a rental property can be an attractive idea, especially when the sales market is performing the way we want it to and it seems likely that you’ll earn the price you’re hoping on the sale of your asset.
If you’re thinking about whether you should sell your home or rent it out – make sure you start by evaluating your own financial goals and needs as well as the strength of the current market. We often work with landlords who inherited a property or found themselves renting out a home that they didn’t intend to keep. For those owners, it’s usually a good idea to sell as soon as the market will deliver.
For others, the long term earnings that come with a rental property investment make renting out the property a better deal.
Evaluate your Current and Future Investment Goals
If you’re deciding whether to rent or sell a home that you’ve been living in yourself, there may be an emotional component to your decision. Are you moving out of it because your lifestyle is changing and you need a bigger or a smaller property? Or, are you moving out of the area? If you’re moving out of the Killeen area, do you think you’ll ever come back to this market?
Selling may be the best option if this property is a personal home and you’re planning to move into another one. However if it’s an investment property or has the potential to earn you attractive returns, renting it out may be the better option.
This is a personal decision that only you can make.
Why You Should Sell: Cash and Freedom
If you have a lot of equity in the property and the Killeen sales market is strong and can provide you with the asking price you’re hoping for, selling is an excellent idea. Perhaps you need an influx of cash to send a child to college or put a down payment on another property. If you have the equity that will deliver a healthy profit and you want to do something else with the money, selling might be your best strategy.
Selling the property also means you get to walk away from it. You won’t be responsible for tenants or maintenance or any of the other headaches that can often come with renting. If you have other investments that are serving your portfolio better and you’re ready to move on, go ahead and sell, especially if the market is going to demand a great price for your property.
Why You Should Hold and Rent: Long Term Gains and Tax Benefits
There are some even better reasons to hold onto the property and rent it out.
For starters, that asset will increase in value, so even if you have a lot of equity and you could make a lot of money on the sale, you can probably make even more in the future. When you have a tenant renting your home, that renter is paying a good chunk of your mortgage and covering a lot of your investment expenses. That’s a huge benefit. You can count on regular rental income and a lower mortgage the longer you hold your investment.
There are also many tax benefits to renting out your property. If you sell, you may be subject to capital gains taxes. As a landlord, you can deduct depreciation and also use the costs of maintenance and professional services like property management to offset your taxable income.
The sale of rental property can be lucrative right now, but holding onto that investment can earn you more in the long term. Talk to us about building a successful investment portfolio of rental homes. We’d be happy to help. Contact our team at Shine Residential Management.