If a job change is requiring you to move out of your Santa Cruz property across the country on short notice, you might be considering whether or not to rent out your home or sell it. The decision to rent or sell is a tricky one and it will depend on a lot of factors including your home’s value, the real estate market at the moment and the amount of work involved.
Here are the pros and cons of becoming a landlord, so that you can decide for yourself which option is best for you:
Advantages:
Avoid Selling at a Loss
Depending on the state of the real estate market, it might be advantageous to wait before selling and hold onto the property for a bit longer. If you can wait out a down market, you will be able to sell for a better price in the future.
Build Equity
Every rent payment that you receive can be put toward your mortgage, which means that when you eventually sell the home you will have much more equity in the property.
Avoid a Long Selling Period
Renting out your home means that you will avoid having the property sit empty for a long period of time while waiting for it to sell. Paying two mortgages during that time can really be a strain on the budget.
Disadvantages:
Getting Another Mortgage Can be a Challenge
If you still owe money on your old home, it can be difficult to get a mortgage for a new property. Some lenders might not approve your mortgage application because of your situation.
Rent Money is Still Taxable Income
Although the money that you receive from renting out your home is income that you can put toward the mortgage, it is still taxable so you will need to keep this in mind when calculating the economic benefits.
Your Capital is Held Up
If you haven’t sold your old property yet, you will not be able to get the equity back on it. This might force you to borrow a lot more for your new home which will result in higher monthly payments.
These are just a few of the pros and cons to consider when deciding whether you should rent or sell your Santa Cruz property. For more information about real estate issues, feel free to email me at Lauren@LaurenSpencer.com or phone me at 831.662.6522.
For additional real estate information, please visit my home page at www.MySantaCruzRealEstate.com.
Resources:
Taxable
Equity
Becoming a landlord
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