Rent out or Sell in sellers market
Member since 2019 · 3 posts · 1 vote
Hi, We own a house in a prime location with a lot of equity in it right now; almost 60 to 75k, maybe more. We are thinking about selling or renting it out. It is currently a sellers market in our location. Do we sell and get the cash for another house for future investment when the market goes down again? Or do we keep the house as an investment and rent it out?
Like all good answers..... It depends! many people are facing this question right now. For me it comes down to this... one in the hand is worth 2 in the bush. The "bush" is the idea that you will get a crazy amount of cash for your home and you will be in a great position when the market comes down. We don't know this will happen for certain or when. The "one in the hand" is the FACT you could rent that house out for good money right now! And this does not answer the the question of where you will stay while you wait for the market to come down. Everything is overpriced. people who have a lot of equity in there homes probably have it the best right now. That's partially why we are seeing such a low inventory. I do not think people want to buy in this market unless they can afford to play the game like investors or it coincides with down sizing, retiring, or moving for work. This market is great for some and bad for others. I don't know your financial situation so I can't truly answer your question. But be practical and honest with yourself. Play out the worst case scenario before you invest. Getting too hasty in the beginning of your investing career can be detrimental. Maybe something to consider is taking some of that built up equity out and using that for an investment property.
@Cindy Free Not enough information. I highly encourage you to try the search bar in the upper right hand corner of the website. Search the forums and learn the importance of running numbers.
https://www.biggerpockets.com/...
Cheers.
Hi Cindy,
Personally I would hold the property as an investment and rent it out. If you want to access the capital consider a cash-out refinance or establishing a line of credit secured by the property.
I think you would want to sell, but I like to hit doubles, not aim for triples and home runs.
The negative to that is that you would have to reinvest that capital. The flip side of that, though, is that you want to invest sooner rather than later in a rapidly appreciating market.
Like all good answers..... It depends! many people are facing this question right now. For me it comes down to this... one in the hand is worth 2 in the bush. The "bush" is the idea that you will get a crazy amount of cash for your home and you will be in a great position when the market comes down. We don't know this will happen for certain or when. The "one in the hand" is the FACT you could rent that house out for good money right now! And this does not answer the the question of where you will stay while you wait for the market to come down. Everything is overpriced. people who have a lot of equity in there homes probably have it the best right now. That's partially why we are seeing such a low inventory. I do not think people want to buy in this market unless they can afford to play the game like investors or it coincides with down sizing, retiring, or moving for work. This market is great for some and bad for others. I don't know your financial situation so I can't truly answer your question. But be practical and honest with yourself. Play out the worst case scenario before you invest. Getting too hasty in the beginning of your investing career can be detrimental. Maybe something to consider is taking some of that built up equity out and using that for an investment property.
How much can you net if you rent it out? then if you sell it and use that money (or some of it) to buy another rental (or two), how much would you net in rent? You don't mention how much you had as a down payment. Is most of the $60-75K (assuming after realtors fees) due to appreciation?
@Cindy Free One of my favorite tidbits I read on this site is that houses are like buses, another one is always coming around the corner. True, But not in prime locations. If the location is very good you will likely always be able to sell for a good price and always be able to find a tenant. Holding might make the most sense, besides housing cycles are long.
How much can you net if you rent it out? then if you sell it and use that money (or some of it) to buy another rental (or two), how much would you net in rent? You don't mention how much you had as a down payment. Is most of the $60-75K (assuming after realtors fees) due to appreciation?
I believe we could get about $200 after everything is paid including some set aside for possible repairs. WE have no idea what we will be purchasing after this if we sell. We thought about holding the cash until the Market goes back down. We are thinking it might go back down in the fall. Then we would buy some properties then. Also, I heard we do not have to pay taxes on capital gains from selling a house if you have had the house for more than 2 years. Is this true?
Like all good answers..... It depends! many people are facing this question right now. For me it comes down to this... one in the hand is worth 2 in the bush. The "bush" is the idea that you will get a crazy amount of cash for your home and you will be in a great position when the market comes down. We don't know this will happen for certain or when. The "one in the hand" is the FACT you could rent that house out for good money right now! And this does not answer the the question of where you will stay while you wait for the market to come down. Everything is overpriced. people who have a lot of equity in there homes probably have it the best right now. That's partially why we are seeing such a low inventory. I do not think people want to buy in this market unless they can afford to play the game like investors or it coincides with down sizing, retiring, or moving for work. This market is great for some and bad for others. I don't know your financial situation so I can't truly answer your question. But be practical and honest with yourself. Play out the worst case scenario before you invest. Getting too hasty in the beginning of your investing career can be detrimental. Maybe something to consider is taking some of that built up equity out and using that for an investment property.
We travel for our jobs so we do not feel we need a house/place to live right now. And because we've only been in business for ourselves a few months, the bank won't finance anything out of equity for 2 years. We haven't checked out other banks though. They would only give us a small amount for a line of credit.
I see. Interesting. I still think you should keep it. If it’s already in a good location with equity. Save the cash flow and wait to reinvest in a year. Then in year to you can go back and access that equity that will be locked up for 2 years.
How much can you net if you rent it out? then if you sell it and use that money (or some of it) to buy another rental (or two), how much would you net in rent? You don't mention how much you had as a down payment. Is most of the $60-75K (assuming after realtors fees) due to appreciation?
I believe we could get about $200 after everything is paid including some set aside for possible repairs. WE have no idea what we will be purchasing after this if we sell. We thought about holding the cash until the Market goes back down. We are thinking it might go back down in the fall. Then we would buy some properties then. Also, I heard we do not have to pay taxes on capital gains from selling a house if you have had the house for more than 2 years. Is this true?
I'm not in the US or familiar with the tax laws, so I'd check with an accountant. I know others have said if you lived in the house for a period of time, it impacts capital gains. In Canada, you pay a percentage based on how long it was a rental (you lived in it for 3 years, rented it for 3 years, you pay 50% and when you calculate years it is based on calendar years, so Nov 2018-Feb 2020 counts as 3 years according to Canadian tax people).
Normally prices are lower in the winter, but with covid things don't seem to follow regular patterns.