Home Buying in San Mateo>Question Details

Jessica, Home Buyer in San Mateo County, CA

I bought a new home. For my previous home, should I rent it out or sell it now?

Asked by Jessica, San Mateo County, CA Fri Oct 26, 2012

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Philip E. Cabral’s answer
The two biggest factors I would suggest you consider are: 1. How much income, if any, would you make renting it out. 2. Where the real estate market is going.

Let's start with 2. Where the real estate market is going. My experience with the real estate market is that in the short term (5-7 years) it will go up and down, with prices in the long term (10-15 years) higher than the last. The real estate market has been down for about 5 years now and it looks like it's turning the corner.

With that said, we go to 1. How much income, if any, would you make renting it out. If you make or even lose just a little monthly it might be to your benefit holding on to the home should the real estate market come back and you can sell your home at a much higher price later. If you have negative income and find that covering the difference puts you in hardship then I suggest selling the place.

Hope that helps.
0 votes Thank Flag Link Fri Nov 9, 2012
If you chose to rent your previous home, you should consider the management duties involved with rental properties unless you hire a management professional. Depending on the condition of the home, you may be called at inconvenient times to handle repairs and maintenance issues. Not to mention finding tenants and getting the home ready for new tenants. All are very time consuming aspects of owning rental property.

That being said, there is no question that a rental property is an excellent investment in the current market. I suggest that you speak with a tax or financial advisor to become fully informed before you decide.

I have more than 20 years of property management experience and am an experienced broker. I would be happy to meet with you to help you make this decision. My contact number is (650)515-9711.
0 votes Thank Flag Link Wed Apr 24, 2013
Your decision should be based on financial planning more than on the current real estate market.

- Depending on your age you may avoid capital gains when selling your home now.

- Using your home as rental property now may lead you to move back to the property in the future so that you can sell it as your primary residence

- What other investment choices do you have? Bank interest rates are very low.

- Will you be able to hold the property if the economy goes through another down turn or be forced to sell it ?

An experienced real estate agent can help you look at these questions and others but would need to know more than what you would want to post on a public website.

Please feel free to call and chat.

The current real estate market has mostly recovered from the economic downturn but has also changed. San Mateo County real estate statistics at
http://julianalee.com/san-mateo-county/san-mateo-county-stat…

Juliana Lee
Cell: 650-857-1000
Top 2 agent nationwide at Keller Williams Realty

Over 30 years experience
Over 1,000 homes sold in San Mateo and Santa Clara Counties
.
Web Reference: http://julianalee.com
0 votes Thank Flag Link Wed Apr 24, 2013
The other answers give you some choices. However, there is an article that explains a 1031 "Starker Exchange". If you do not need the funds from this property and have some time, you could rent the property for two tax periods and then use the funds, tax deferred, to purchase perhaps commercial real estate, i.e. an appartment building, etc. This way you retain 15% to 38% of the the sale funds giving you more funds, to reinvest in other property. Please call me for an article by 37th Parallel that explains the possiblilies. This saves more of your funds for investment and helps you build a retirement income as well as deferring taxes. If you keep the investement properties and leave then in your estate, your hiers, with current tax law, may not have to pay taxes on that deferred income. Of course, always check with your tax advisor when considering any sale and investment tax consequences.
If you need to sell, this is a great time to sell, the inventory is low in San Mateo County and interest rates are at an all time low. Over 35% of Home sales in our area are also being made with all cash from buyers in every price range and every home condition. Rentals are in demand as those who lost thier homes are now renters and new families are forming bringing new renters to the market place. So, as a seller, or landlord, you are in the "driver's seat".
I would be happy to help you which ever way you chose to go.
0 votes Thank Flag Link Sat Oct 27, 2012
I have the similar questions when I bought my second home. My agent points me to a calculator, which is very helpful. http://buyingvsrentingcalculator.com/
Actually, when you buy this new home, you should make the exit strategy as well. The RE property is a bigger investment than stocks. When we buy, the exit strategy should be always ready.
Hope this helpful.
0 votes Thank Flag Link Sat Oct 27, 2012
It depends on a variety of factors. If you own it mortgage free and prefer a monthly cash flow rather than a lump sum payment, the renting may be a great option. This may also be a viable option if you owe a mortgage if you can get enough rental income to cover your mortgage payment, property taxes and insurance. (Please note if you're renting speak to your insurance agent as you will need to modify your insurance coverage)

If the rent you can get isn't sufficient to cover your mortgage etc or you prefer having your money now, then by all means sell your home.

Bear in mind renting has it's own challenges. You'll need to decide whether you're going to manage the property yourself or use a professional property manager who will likely charge you somewhere in the range of 10% of the rent generated. If your home isn't located someplace where you can check on it regularly I'd definitely advise you to sell, long distance renting opens you up to to many risks. You want to be able to check on your property regularly to make sure everything is OK, and that it's being properly maintained.

Regardless of what you decide I wish you all the best.
0 votes Thank Flag Link Sat Oct 27, 2012
It depends on what you are attempting to discern from that question .

Do you mean whether or not its a good time to sale based on market conditions ?

Homes are not staying on the market as long as they were last year around this time .

Your chances are very good in selling fast for a competitive price


Taj Weldon
209-740-4176
Realtor.
DRE 01816152
Tajweldon@connectrealty.com
0 votes Thank Flag Link Fri Oct 26, 2012
Depends... If you rent it, are you cash flow positive? If yes, keep it. You can make out the rest...
Web Reference: http://talisrealestate.com
0 votes Thank Flag Link Fri Oct 26, 2012
Good Question. You bought a new home. If you dont need the proceeds from the previous home, just rent it out. Make sure you get good clients with great referrence and that you are not to far away. You dont want to hire a managemnet company if you are easy to mantain the home if you have any problems. If you have siblings and they need money, and you are set for life, with a good financial situation, mabe you want to sell if , if you family need money and you want to help them out. You have alot of options. I hope this has been a help to you and your decision. Good luck on the new home. Enjoy and keep in touch on your decidsion. If you know anyone looking i LA county or Oange co, send them my name and phone number 714-618-8031 Diane
0 votes Thank Flag Link Fri Oct 26, 2012
Jessica,

Keeping your home as a rental can be a long term investment for retirement. As long as you have equity in your home and the rental payments cover your mortgage, taxes. insurance and expenses. It's true that dealing with tenants can be challenging sometimes and they may not take care of your property.

Right now the real estate market is very busy and you could probably sell your home quickly and for a good price. As a rental, if you choose to sell later, there would be capital gains taxes to pay.
If you have lived in the home 2 consecutive years out of the last 5 years you will avoid this. Plus, a single person has a $250000 tax exemption, a couple $500000 tax exemption for personal property.

There are many things to consider. I would be happy to discuss your options. I have been listing and selling homes on the Peninsula for 25 years.

Diane Mollison, Realtor
DRE00962392
diane.mollison@cbnorcal.com
650-685-7626
0 votes Thank Flag Link Fri Oct 26, 2012
I don't know if we can answer that without any information about your previous home and understanding your personal financial circumstances. I will tell you though fhat being a landlord is no picnic financially, and not for the weak of heart. If you go that route be up for the challenge even if you hire a property manager because at the end of the day all problems will stll be yours.
0 votes Thank Flag Link Fri Oct 26, 2012
Jessica. That's a call only you can make. I recommend having an agent CMA your house, look at recent comparable sales and determine a likely sale price for your home. From that information, you should be able to decide whether it's right to hold the property and manage rentals, or sell it and wash your hands of the property.

Once you establish the likely result of a sale and a rental, It's really all about what works for your current personal situation.
Web Reference: http://SanMateoLiving.com
0 votes Thank Flag Link Fri Oct 26, 2012
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