Should I Rent Out My House or Sell It?

By
Real Estate Broker/Owner with Prime Market Realty

Should I Rent Out My House or Sell It?

This question has probably ran across the minds of many homeowners, and probably much more  now since this buyer’s market is forcing many buyer’s to make tougher decisions regarding their property.  Every situation is different, some rent out their homes due to necessity, (Market is slow, need to move asap, etc), others rent due to investment related goals. 

Benefits of renting your home: 

Tax-breaks could offset income tax on rent.

Depending on the rental market pricing and your monthly mortgage amount, you potentially can cover your monthly mortgage payments and create cash flow.

You can allow your property to appreciate as the market returns.

 

With these benefits, come potential risks such as various tenant issues, which a property management company such as Prime Market Realty could help mitigate and manage.

Also take note of the 2-5 rule when it comes to capital gains, especially if you are expecting a large profit on a future sale of your home.  You would have to have lived in your home for at least 2 out of the last 5 years prior to the sale of your home to get the tax-free incentive; however there are exclusions and exceptions to this rule.  Looking further into this may alter your decision on renting out your home, or at least for only a certain amount of time.

Benefits of selling your home:

Freeing up equity that could be rolled into a new home or for investing

Possible tax-free capital gain

Not having to deal with another property

 

One of the cons of selling a home especially in this buyer’s market is the obvious potential loss in property appreciation when it does occur.

There are many additional reasons when considering either option.  Only you can decide which one is best for you.   But for additional answers to your questions, the team at Prime Market Realty can ensure that you get the direction and support to help you decide what is best for you.

Prime Market Realty

Marcel Murrell

Broker\Owner\Realtor

Office: 630 235-3848

www.primemarketrealty.com

 

Comments (3)

Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Marcel, one piece to think about is how it will affect your qualifications on the purchase of the next home. Both Fannie Mae and FHA have Buy and Bail Rules that pretty much eliminate using rental income to off set the existing mortgage payment (unless you have a huge equity position)

This is a fairly new guideline that people often forget.

Jan 20, 2010 04:57 AM
Marcel Murrell
Prime Market Realty - Naperville, IL

Robert, good addition.  I know with FHA there are exceptions for those relocating and\or being transferred through an employer.  Once will have to show the lease and deposit with this exception as well.  Otherwise, yes the owner would either have to qualify for the both loans or have at least 25% equity within the first home

Jan 20, 2010 05:10 AM
Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Marcel, Exactly!  Glad to hear you are on top of things!  My experience is that most of the time it is the people in the lower equity postion that talk about holding on to the home until values go back up and you need to be sure their Loan Officer is up to date on what truly can be done in terms of qualifying for a  loan.  I have seen more guideline changes in the past 2 years than I have seen in the previous 20 years combined!

Jan 21, 2010 12:52 AM