Debt Free

In the current real estate market the sell or rent question is being asked more often, and it's not getting any easier to answer, either. What should you do if you have an unwanted property that you can't live in for some reason? You really have three choices, but only two of them are practical for most people. You can keep it, and let it sit there and appreciate. That choice may be nice if you can keep paying the mortgage payments, but for most people, that's a waste of money, if they can do it at all.

You can rent it out and take advantage of the rental income, appreciation and tax benefits you receive by renting the property out. Many people however, just don't want to be landlords, no matter the financial incentives. You can mitigate some of the problems faced by being a landlord by hiring a property management company, but most investors would like to cover that expense in the rental cost. That depends on what the rental market is in your area.

You can sell the unwanted property, and hopefully make a profit after you selling expenses and taxes are paid. Part of the equation rests upon the current ownership structure of the property. Do you own it alone, or are you part of a partnership or investment group? What are the feelings of the other parties involved? If you want to sell, could they be the buyers?

How should you decide weather you should sell the property or rent it out? Part of that depends upon what your personal and investment goals are. Another part depends upon the way the property is financed. Do you have an ARM or interest only mortgage on the property? If an ARM, is it going to adjust soon? Is there a balloon payment in your future? If it's going to adjust, what will the post adjustment payments be?

You need to sit down (or hell, maybe you think better standing up) and do a financial analysis. Try and take the emotion out of the equation entirely. Will it be profitable to keep the property and rent it if you want to become, or remain a landlord? Can you sell it for a profit? Is the real estate market appreciating in your area, or has it hit a bit of a snag? In this situation, much depends upon the conditions of the local real estate market. In many areas right now, they are pretty abysmal, but some areas are still going strong.

Look at it this way. At least you are fortunate to have an extra property that requires you make such a decision. Many people would love to be in that position.