SALEM OFFICE: 503-588-0940
|
CORVALLIS OFFICE: 541-758-4200
Leasing 503-881-7829
Maintenance 971-208-3778
A common question among investors is: should I sell or rent my house? Whether you have a single family home, townhouse, condo, or apartment complex, one of the questions you might be asking is whether you should hold your property and rent it out, or sell. And, if you do sell, what will you do with the money? There are a few things to consider.
As a property manager, asset manager, and investor myself, this is one of the questions I’m constantly asking. I can always be found running numbers, evaluating goals, and deciding whether I should continue holding a property or whether it’s the right time to sell. One of the factors to consider is whether you have maxed out the value of the property. You have to think about how the market is performing, and whether you can sell for a decent amount. Rotating the sales proceeds is also a good thing to consider, and whether you can do a 1031 exchange. The inventory right now is low, so it can be challenging to find something new if you sell what you currently have.
Generally, I agree with the Warren Buffett mentality. I believe in buying a good property and holding it for the long term. On the investment side, you want to understand your goals. At the beginning of your investment career, your goals might be more aggressive. Or, maybe you’re risk-averse, and holding is the right answer for you.
While determining what to do, many investors look at return on equity, or ROE. This is where you calculate how much equity you have in the home and what that will mean for profits if you sell. Compare that to how much you’re making on it as a rental. If that number is low, like three percent, your money isn’t working too hard, and it might be best to sell. Look at the market and the available inventory.
You have to take taxes into account. If you sell, you may want to utilize the 1031 exchange or cash out. Deferring and avoiding taxes is advantageous, so you can consider passing your property onto heirs. Check with your accountant and your attorney. An estate planner can also help. In general, real estate has a lot of flexibility, and there are options for generating income and creating long term wealth.