As a property owner, it’s common to think of ways to capitalize on what may just be the largest investment of your life. Luckily, there are a variety of ways to do so, especially if you own more than just one property. However, for those who only have one home, profiting off of this asset through renting may be more trouble than it is worth.
This is where selling your home might be the route for you. In this article, we will go over some points of consideration in deciding to sell your home or rent it.
First and foremost, take a good look at your finances. Review your savings accounts and spending habits. If your finances allow you to put down at least 20% on a new home and you are interested in renting out your current residence, you might just be in a comfortable position to allow this to happen.
If you are deciding between renting out your home or selling, you’ll want to assess current and future depreciation. Over time, assets can depreciate (lessen) or appreciate (grow) in value. If you are currently located in an area that is less desirable than it was when you purchased it — such as a city apartment pre-COVID — renting instead of selling might be your best choice. Keep in mind that you are risking your next asset depreciating too, so be extra mindful when choosing your new home.
When purchasing a large asset, tax implications can play a major role in the cost of your home. If your home has appreciated significantly since you purchased it, you will likely owe hefty taxes due to capital gains. Selling your home can help save you in taxes when it comes to maintenance and upkeep of your property.
Market conditions play another huge role in selling/renting your home. For example, if the economy is doing poorly, it is likely that buyers will not be putting money into going on vacation to rent. Instead, they will want to invest in an asset they can hold long-term.
If you do not live near your rental home, property management can become a significant cost. You will have to hire a local company to clean and maintain the space in between tenants, while also being on-call for when renters need assistance or have questions. If you do not have enough savings to invest in these maintenance services, it might not be the best choice to rent your space.
Let’s face it — selling property can be an emotional journey! This is especially true for sellers who are putting childhood or family homes on the market for a new buyer to move into. If your emotions get in the way of making the sale, renting is a great alternative to selling, since you will still be able to profit off of the property.
We hope this article helped you better understand the differences between selling your home and renting it out, so that you can make the best choice for you! To consult with the experts and make the most informed choice when it comes to buying/selling property, contact VSells & Associates today.
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Whether you are buying or selling, we at VSells & Associates make it our mission to guide our clients through the whole process. We make moving simple, straightforward, and as stress-free as possible.