When you own some Santa Cruz real estate and you’re ready to move on, either leaving the area or buying another property or looking for other investment opportunities, you’ll need to decide whether you want to sell that existing property or rent it out.
There are pros and cons to both scenarios. Before you make the decision, consider your personal investment goals and financial position. Then, decide whether you think you’ve finished completely with this home or you still have more money to earn from it.
Evaluate your Financial and Personal Situation
If you’re deciding whether to rent or sell a home that you’ve been living in yourself, there may be an emotional component to your decision. Are you moving out of it because your lifestyle is changing and you need a bigger or a smaller property? Or, are you moving out of the area? If you’re moving out of Santa Cruz, do you ever envision coming back?
Everyone knows that the California real estate market is expensive. It can require a lot of money just to enter it. So, if you have a piece of real estate already and you’re thinking you might return to it at another point in your life, whether it’s in 10 years or when you’re ready to retire, you might want to hold onto it and rent it out. But, if you’re leaving Santa Cruz and you don’t want anything at all to hold you to the community, it might be better to sell and move on.
This is a personal decision that only you can make.
Reasons to Sell: Cash and Freedom
If you have a lot of equity in the property and the sales market is strong and supportive, selling is an excellent idea. Perhaps you need to get your hands on some cash in order to send a child to college or put a down payment on another property. If you’re able to get the asking price that you want and you will stand to earn some serious money on the sale, there aren’t a lot of good reasons to hold onto the property, especially if you want to do something else with the money.
Selling the property also means you get to walk away from it. You won’t be responsible for tenants or maintenance or any of the other headaches that can come with renting. If you have other investments that are serving your portfolio better and you’re ready to move on, go ahead and sell, especially if the market is going to demand a great price for your property.
Reasons to Rent: Long Term Gains and Tax Benefits
There are some excellent reasons to hold onto the property and rent it out. For starters, that asset will increase in value, so even if you have a lot of equity and you could make a lot of money on the sale, you can probably make even more in the future. When you have a tenant renting your home, that renter is paying a good chunk of your mortgage and covering a lot of your investment expenses. That’s a huge benefit. You can count on regular rental income and a lower mortgage the longer you hold your investment.
There are also many tax benefits to renting out your property. If you sell, you may be subject to capital gains taxes. As a landlord, you can deduct depreciation and also use the costs of maintenance and professional services like property management to offset your taxable income.
We’d be happy to talk to you about the benefits of renting or selling your Santa Cruz property. Contact us at Real Estate Eight Three One, and we’ll tell you more about where we see the rental and the sales market going.