June 4, 2010, Newsletter Issue #186: How to Decide If You Should Rent or Sell Your House

Tip of the Week

A number of factors typically will influence your decision to sell your home or place it in a home rentals database. In most cases when the economic environment is positive, you’ll often decide to sell your home. Receiving cash from the sale and using it to invest in another property is often the best course of action.

However, there are circumstances that might lead you to decide to create a rental home instead. A "down" market, as has occurred in the early years of the 21st century, has persuaded many to rent instead of sell their homes. When prices of real estate fall, you may be better served by renting your property until the market reverses and prices rise again.

One basic rule you might want to consider: If you can earn a decent profit choosing to rent your property and then earn an excellent gain by selling it in the future, this strategy may work for you. Recent well-publicized problems in the real estate market may indicate that you should consider renting in lieu of selling your home. When the market turns up, as it will, you may then want to reconsider your rent or sell decision.

The bottom line: When the market is good, you’ll probably choose to sell. If the market is in stagnation or a downward spiral, you may want to rent for the short term. But if you want to have real estate income and long term gain with the favorable tax treatment that goes with it, you may want to rent regardless of the market.

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