Ready to Make Your Move?Guest Post By Dusty Henry at www.allpropertymanagement.com
What are the Benefits of Renting vs. Selling?
After going through the epic process of purchasing a house, then living there for a few years, many
come to the same question – what’s next? When relocating, whether by choice or necessity, most
people automatically assume they need to sell their homes, but this may not always be the best option.
Depending on the housing market in your area and your financial goals, renting your house out may
prove to be a good investment.
Long Term Investment
Renting your house out may not seem like a great source of income at first, but keep in mind that
while your tenant pays your mortgage, you’re benefiting from its annual appreciation while investing
in a future income stream. As you pay the mortgage down with your rental income, your monthly
profit effectively grows each month, as an increasing portion of each payment goes toward paying off
the principal portion of the loan. Meanwhile, rent prices and house values can be counted on to trend
steadily upward over time, despite ups and downs along the way .
Once the mortgage is paid off, if you continue to rent out the home then you will start to actually make
a substantial profit on the home. Keep in mind though, there are costs that go alongside renting such
as property management fees (if you should choose to hire a property manager), repair fees, etc. It is
important to do research for your particular home and what the costs will be – it is likely to differentiate
from property-to-property.
If you are to sell your home, you will immediately get a large chunk of money. This can be very helpful,
especially if you are looking to buy another home. If you can afford to buy another house without
selling, or don’t mind renting from someone else for a while, you can build assurance of income later on
it life when you possibly may need it.
Judge by the Market
Even for those who like the idea of selling their home and being done with it, selling right away could
be a huge financial risk and mistake. It is no secret that the real estate market has been going through a
rough patch in recent years. If you need to relocate right now, think twice about just selling your house.
Renting while the market stabilizes can give you extra time to wait for the right moment instead of
settling for something that will likely set you back.
Keeping it in the Family
Maintaining a property as part of your estate provides something to pass on to your family. Over time,
the property will appreciate in value and build equity. While sentiment and emotions should not play a
major role in deciding if it is a good investment to keep or sell a property, renting can be a perk for those
who have fantasized about passing off their estate to future generations of family without harming your
financial status.
Tax Benefits
While there are taxes imposed on rentals, if you keep track of your maintenance and other expenses
that go into the rental, you can have most of the taxes deducted. Taking this route does require you still
pay attention; if you choose to sell later on you may face issues being taxed on the depreciation of your
home under the Capital Gains Tax exemption.
No matter which route you take, it is very important to do your homework on your home and your local
market. Be aware of your finances while being mindful of what your financial situation may be in 5,
10, 20, or more years. Having all the information will allow you to decide which is the safer choice and
better investment.
About the Author
Dusty Henry is a writer and editor at All Property Management. As one of the most expansive directories
and collections of property managers on the Internet, All Property Management serves as a tool to
connect property owners with the right rental manager for them.
