Should you sell or rent your home? This is a question we hear a lot, and it really depends on the market and your long term financial goals. If you’re having trouble selling your home at the price you want, or you’re unable to earn any real money because of what you still owe on your mortgage, renting it out is an excellent alternative. Today, we’re sharing four reasons to rent out your home instead of selling it – even if you’re moving out of state.
Preserve Your Asset
Selling your property allows you to earn a one-time paycheck. However, when you rent your home out, you have the potential to earn ongoing investment income. You are holding onto a valuable asset that will only increase in worth. If you keep the house and rent it out, you could potentially move back into it if your life circumstances ever require it, or if you decide you want to retire in the area.
When you sell your house, you’re at the mercy of the current market. You might have to settle for a price that was lower than what you expected, or you could suffer through long months of vacancy where no one makes an offer but you still have to pay the mortgage and the bills. By renting it out, you’re letting its appreciation increase, and you’re paying off the mortgage with minimal out of pocket expenses. When you have a good tenant in place, you’re basically allowing someone else to pay off your mortgage.
Prepare for Future Sale
You can always sell the investment later – when the market is stronger, you can price it higher, and you’re able to earn more on the transaction. Having a tenant in place means you’ll need to keep the home well-maintained. When you keep up with incremental upgrades and updates over the years that you rent it out, you’ll face fewer expenses when it’s time to put it on the sales market. The property will already be in excellent condition.
There are several tax benefits to keeping your home and renting it out instead of selling it. Most of the costs and expenses associated with your rental property will be eligible for deduction. This includes maintenance, any property management fees you pay, and also depreciation. There are a lot of tax deductions that will offset the income you earn on the property, and you’ll probably find yourself in a stronger financial position at tax time.