The million dollar question, should I sell or rent my property? Now more than ever this question seems to be popping up. The selling market right now is crazy! Surely, you have seen neighbors or family members selling their property and the property going for way above asking price. However, the long term revenue of an investment property is also a very attractive option. Now you are stuck between selling or renting. We are here to help you weigh the pros and cons to both. Whatever you decide it is important to understand and learn about all of the options you have when it comes to making the best decision.
There are a few things to consider before making your decision. After taking these points into consideration you should be able to decide if renting or selling is the best option for you.
- What would be your plan with the money?
- How long have you owned the property?
- What is the state of the current market and cost to buy back in?
- What is your debt position on the property?
Renting can seem daunting, however it can be very rewarding. Real estate investing seems to be a fast growing way to bring in a second income and even has become some people’s primary source of income. A large property investment portfolio can be very successful. Selling can be a quick fix, however, that home you have out grown may be the perfect place to start your property investment portfolio. Bigger Pockets has a wealth of information about strategizing around growing an investment portfolio and can be a good resource to get your questions answered!
If you have long term goals and have owned the home for a few years or more, renting may be the way to go for you! You would likely have a lower than usual mortgage, a favorable rate and a ton of equity you could pull aside for other projects. Additionally, you could assume appreciation over the long haul. Though year to year appreciation can fluctuate holding a property over the long haul has consistently appreciated in Denver and the vast majority of markets. Even if you were to net $0 in rental income for the first year, you still would still be getting a return on the appreciation of the property.
On the other hand, selling can seem more attractive in some ways. Selling comes with what we can almost call “instant gratification”. You have a property taken off your hands that may have need many repairs, while also receiving a pay out. If you need to turn the equity from the property into cash in order to put a big down payment on your next property, selling may be the way to go. However, this may be possible with a refinance or second loan as well. There are multiple ways to access that equity in your property, selling may be the way to get the most money. It comes down to if your goals with your property are short or long term. Will it be more be beneficial for me to sell my property rather then rent?
If you are looking through a short term lens, need quick cash or are concerned about putting money into an investment property over multiple years, then selling would make the most sense for you! At the moment, in the current market, you could get top dollar for the home with the thought that the market could decrease at anytime. It is a seller’s market right now and properties are flying off the market way over asking prices. Also, if you have purchased the home more recently, then the mortgage is likely higher and as a result would minimize your initial cash returns. Again, if you are on a short term goal and aren’t interested in the extra processes of renting, selling would be your best option.
There is no wrong answer and there are pros and cons to each situation. It all comes down to what kind of goals and aspirations you have for your property. Do you want want some fast cash? or do you want to invest that property and see where renting takes you?