Perla IrishWith approximately 43 million households renting in the US, it can be a lucrative long term investment.
On the other hand, if you sell your home, you’ll get a big lump sum straight away.
Thinking about selling or renting your property? Here are some things to consider before you make a decision.
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The Pros and Cons of Renting
Regular Income
Pro: If you decide to rent your property, the tenants will pay you to live there. This gives you a steady and regular income.
If it’s paying off the mortgage, you’ll really feel the benefit when it’s paid or if you decide to sell in the future.
Costs and Expenses
Con: If the mortgage is being paid, you might not see that extra cash in your pocket.
You will also have to pay tax on it like any other income source.
Don’t forget to keep some aside for maintaining the property to a decent standard. You also need to fix any surprise problems for your tenants.
Appreciation
Pro: For a long term investment, real estate is one of those things which will always increase in value.
Even if the market slumps, it always recovers and prices seem to be even better than before! It’s called the Real Estate Cycle.
Demand
Pro or con: If your property is empty, you’ll have to fit the bill for the mortgage until new tenants are found.
If demand is high, it shouldn’t take long and you can usually get away with charging a little extra.
If demand is low you could be waiting a long time and have to price yourself down to get people in.
The Pros and Cons of Selling
Instant Cash
Pro: As we mentioned before, if you’re tight on funds, once your sale goes through, you’ll have a big lump sum to play with.
Capital Gains Tax
Pro or con: if you’ve lived at the property, you may not have to pay tax on the profit from the sale. But if you haven’t you definitely will.
Costs
Pro or con: Yep, there are costs to selling your property too. The biggest one being listing fees.
You may be thinking, are there ways to sell my home without listing? Luckily, there are!
Demand
Pro or con: Much like renting a property, selling takes a little time and effort too and demand plays the same role.
Other Considerations
Worth
Check how much your property is worth and how much you originally paid for it.
If you’ve experienced depreciation, you might want to wait to sell until the value goes back up and rent in the meantime. If the value is higher, cash in.
Attachment
Some people become attached to their homes. If you’re not ready to let go, or you may want to move back in in the future, renting is probably for you.
So Should I Rent or Sell?
The most important thing is not to rush into making a decision. Do plenty of research on selling or renting your property before you decide.
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