Home Selling in Troy>Question Details

Alice, Home Seller in Troy, MI

I own a home that is free and clear. What are your thoughts, both plus and minus, on leasing the house as opposed to selling it?

Asked by Alice, Troy, MI Tue Sep 13, 2011

Help the community by answering this question:


Keep your home and write yourself a "rental check" each month that goes into savings. Then, when our economy turns, you will have a nest egg for investment, if you so desire.
1 vote Thank Flag Link Wed Oct 5, 2011

Your question is a very good one and deserves an equally good responce. However, to do so requires a great deal of information that needs to be considered before any sound decisions can be made. Depending on YOUR current and future needs/wants, there may be a number of solutions available to you that will work well.

The best advise I can give is to contact a knowledgeable REALTOR® that knows the market where you own the home and discuss the pro and cons of both actions. Consideration to both short and long term financial benefit and how each contributes to YOUR wants and needs is the ultimate goal.
1 vote Thank Flag Link Wed Oct 5, 2011
Good Morning Alice!!

It depends on what you want out of the property. Since the rental market is doing so good in this economy you have the opportunity to earn a good return on your investment.. But always remember you have to deal with maintenance issues. I would recommend having a market analysis done on the property for both sales and rentals and make your decision based on that information. Make sure you work with a Real Estate agent who can help screen possible tenants if you decide to go that route. I would also recommend that you talk to your accountant or tax person for guidance on any tax issues either scenario might produce.

If you need the assistance of an experienced agent I would be happy to assist.

Good Luck,

Karen Paytas, GRI, CMS
Real Living Kee Realty
1 vote Thank Flag Link Tue Sep 13, 2011
The answer depends on your personal experiences, like and dislikes. Do you think that you can get a better return on your money leasing your home or investing in another investment vehicle? Another factor to consider is what are your skill sets. Do you want to manage and maintain the home yourself or hire a management company to do it? As the price of the home goes up, there are fewer buyers and lower rates paid for rentals. All of these questions factor in your decisions. Sitting down with a qualified realtor and running the numbers is the best way to reach a sound decision. I manage many properties for others in several price ranges and different cities. I would be happy to give you my opinion on what your property will sell at and also what it will rent for.


William Shamoun
Real Estate One Troy
Cell (248) 882-5966
Office (248) 813-4900
0 votes Thank Flag Link Fri Mar 22, 2013

It all depends on you financial situation and what you are looking to do in the future. In real estate everything is about leverage and prices and interest rates are at record lows. You can hold the home pull some equity out of it and purchase another place. It is hard to buy and sell in the same market. If you can hold on to it I would and if you need some money for another place borrow against it..
0 votes Thank Flag Link Wed Oct 5, 2011

Best answer is talk to a qualified Realtor and financial adviser and see how the market is doing in your location. Like the weather the Real Estate market is local. I know MI has been hard hit with the job market so see what is best for you based on the advise you get from a good qualified Realtor. If you need to know one Let me know. I am CRS agent and would be happy to put you contact with a great agent. Good luck.
0 votes Thank Flag Link Wed Oct 5, 2011
More Millionaires own real estate....quite an annuity and you can talk to a financial advisor about funneling the proceeds into a Roth IRA or some other investment vehicle. I have 18 homes....and love each and every month the rent comes in. Sure there are headaches, but the long term rewards are amazing.

Sell it and it's gone.....you don't say what it's worth....but the safe play is get a high quality property manager and let the money roll....
0 votes Thank Flag Link Wed Oct 5, 2011
Hello Alice
In this market, if you don't have to sell to buy then don't. If you don't mind being a landlord then try renting. If you want to try to rent it but want somebody else to deal with it, then hire a property management company. However, keep in mind that renters dont value your space like you do and tend to live a little rougher.That is not coming from personal experience but from what I have been told by people who have rented. Their are great renters though!
If you want to sell, you would be selling in a down market. Get a market analysis of your home by a real estate agent to determine value. You have to keep in mind the flip side of things too. So if you selling in a down market, you are also buying in a down market. With interest rates where they are at, you can't go wrong.
I hope my answer helped!

0 votes Thank Flag Link Wed Oct 5, 2011
Depends on the value of the home and what the value of the rental will be. Example. If the house is worth $100000 and the rental will be $1300 per month less monthly taxes and insurance are equal to $300 per month the net rental amount is $1000. If the house is in good repair and the tenant is of good quality then the net income per year will be $12000. The return on your investment will be 12%. Better than the bank. If you have no experience renting properties than you should seek help. The main thing is to look for a QUALITY tenant.
0 votes Thank Flag Link Wed Oct 5, 2011
good morning alice... as mentioned below....landlord or no?...it's not for everyone...even with a management company....
it is a great time to sell either offering all the terms of sale, or seller financing for top dollar & max return.....
i'd be glad to help...
best regards..
bob mcclure
Web Reference: http://www.percentPlus.com
0 votes Thank Flag Link Wed Sep 28, 2011
It all depends on whether you want to be a landlord or not. Being a landlord can turn into a part time job. If you don't mind that and would enjoy the extra income then its an option. You must consider certain costs though when you are trying to figure out whether you are making a profit or not. Certain things within the house will depreciate and need to be repaired. Roof, systems, etc. If your rent isnt covering the eventual replacement of these, you might not be making a profit. Also, I'm not sure what your house is worth, but you have a substantial sum of money tied up there. You also need to consider other potential ways that money could be put to use. At the low end, you could take the money and put it into a risk free CD that would pay you interest. Your only job would be to cash the checks. It wouldnt pay much, but it would pay something. And it will never call you in the middle of the night telling you the plumbing isnt working properly. So if your rent can generate revenue sufficient to cover your cost of capital, and depreciation on the house, plus your efforts at managing things, then it might be a good idea if you don't mind the extra effort. I saw someone talking about puting a property into an IRA. Be VERY careful about that. I am not a tax accountant but I suggest you talk to one before doing that. I know having a rental property in an IRA creates serious issues tax wise that must be considered, particularly how bills are paid for the property and where that money comes from. It can create serious tax problems if not done exactly right and you need to know how this works before doing it.
Web Reference: http://JenniferMu.com
0 votes Thank Flag Link Tue Sep 27, 2011
First of all, congratulations! Owning your home free and clear is the ideal goal. It is the milestone that allows one to stop, take a breather and take a look around to consider all available options. Beginning with: what do you want to do? If retiring, leasing can be an idea to generate income for your leisurely life, but it will require rolling up your sleeves to get down and dirty with plumbing issues, painting, carpeting, etc., unless you hire someone you trust completely to do that. Or simply insert a clause into your lease agreement that they bear all the costs or repairs subject to your approval and provide a discounted rate. But, it can be messy prospect and very demanding. If you're not willing to do that or hire someone, then selling could be the another option. But what will you do with the proceeds? Unless you plan on relocating to do a 1031 exchange, you will be facing some hefty tax consequence, unless of course if you qualify for the one time tax-exemption. It all boils down to what your plans are. Did you want to move out to California...
0 votes Thank Flag Link Tue Sep 27, 2011

The correct answer for you depends on what you want to accomplish. Are you moving up? moving away? looking to invest in additional properties? Are you having financial difficulties?

There are positives and negitives for selling and leasing depending on what you want to accomplish in the long run.

Best of luck
Web Reference: http://www.SeanSeckar.com
0 votes Thank Flag Link Tue Sep 27, 2011
Hi Alice,

Depending on you current situation and market conditions in your area you may have several options. If you are considering a move-up situation then this is a great time for you. Since your home is free and clear then you can use that for a larger home. The equity on a larger, more expensive home will increase more on a percentage basis than your current home. However, If you can purchase another home, and lease you current home then that would be the best option in my opinion. Most of my clients wish they kept all the real estate they purchased, but sometimes that is just not an option. So every situation is different, but since your home is free and clear, you are in a better situation than most.

Hope this helps

Michael Arshaid
0 votes Thank Flag Link Tue Sep 27, 2011
Someone here said you might be able to put your property into a self-directed IRA. You can not! You can purchase an investment property out of a self-directed IRA account, it is done everyday and I have done this many times. But you can not put an existing property that you own into such an account. And you can not purchase a property you own to put into the account.
0 votes Thank Flag Link Tue Sep 27, 2011
You haven't said why you are considering making a change. Is this something that you need to do right now? In order to begin to answer your question, I would want to understand the motivating factors behind your question.
0 votes Thank Flag Link Wed Sep 21, 2011
If it were my home, I would refinance and use the equity to purchase an income property. Rates are incredible, and prices are down. Time to buy low! Of, course, that's me. Investment homes are not for everyone, do your due diligence and make sure that it is for you. Good luck and have fun with it! You are in a very unique position, most people are upside sown with mortgages, consider yourself blessed with opportunity!
0 votes Thank Flag Link Mon Sep 19, 2011
alice, rent it for the rest of your life. i might transfer property into LLC or an entity in which you can take the income and put it on your schedule E( i believe), in order to save on taxes....you might even be able to transfer the asset into a self directed IRA and really save on the income generated. here is some blogs about real estate investing.

best of luck
0 votes Thank Flag Link Fri Sep 16, 2011
Hi, It depends on your current market and if you will take a big hit selling it now. Renting can be great but keep in mind being a landlord is not always easy. You should familiarize yourself with landlord tenant laws and the responsibility of managing the property as well.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
William Raveis Legends Realty Group
0 votes Thank Flag Link Wed Sep 14, 2011
Talking with your tax advisor is important - aside from that, much depends on how you feel about being a landlord.

Good luck in making your decision,
Jeanne Feenick
Unwavering Commitment to Service
0 votes Thank Flag Link Wed Sep 14, 2011
Sigrid must have misunderstood my answers. there were two answers, she only answered one. The other one is the Federal tax on the sale of your personal residence, the other is a tax on investment property.
If you rent your personal residence out, then after a few years it becomes investment property (I think it is three years, not sure) and taxed as such when you finally sell. Personal residence property is not taxed at all.
0 votes Thank Flag Link Tue Sep 13, 2011
Larry is not totally correct. I will explain. You can only have 1 home that is taxed as a homestead. If you lease your home, you will be changing the taxable status to non homestead which is taxed at a higher rate. It is usually about 1/3 higher. when you eventually sell it, the property transfer fees are the same. At this time they are $8.60 per thousand of the selling price. all expenses are tax deductable for a rental including the higher non homestead taxes.

I can explain further if you like. just ask me. I'm here to help you make the best decision for yourself.


Sigrid Garrick
0 votes Thank Flag Link Tue Sep 13, 2011
Check with your tax man of this. If you rent for 3+ years ( I think) it becomes an investment rather than a home and you will be taxed accordingly when you sell it. You also loose your homeowners exemption and your property taxes will go up
0 votes Thank Flag Link Tue Sep 13, 2011
You have received some good answers. I Beleive you should interview some agents in your home to help you figure out what you want to do & with whom. There are some other options. Selling on a land contract & also lease with opt to purchase. Those 2 options are doing very well now. Troy sales have been doing quite good & the intentory is down. You should do good with whatever you choose. You can check out my web site.
Hope this helps you,.
Have a wonderful day!!!
Sigrid Garrick
E-Pro & SFR Certified Realtor
0 votes Thank Flag Link Tue Sep 13, 2011
Alice it completely depends on your goals, if you need the money to move onto another house than you should sell, if you do not need the money and can wait it out, prices will go up again. if you are going to rent just make sure you rent to a tenant who is well quailified so you do not have any losses if they dont pay or wreck the place.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Sep 13, 2011
Hello Alice,
The Rental market in Troy is very good. If you decide to go this route, you must have it approved by the city for rental. It also depends upon whether you need to sell or not. Selling prices are as you know are substantially down. I can provide a Market analysis on both sales or rentals. If you are interested, go to my web address for contact information. Thank You for your inquiry. Steve
0 votes Thank Flag Link Tue Sep 13, 2011
Hello Alice,
Keep in mind that if you decide to lease your home then you are still responsible for maintenance of the property and well as keeping your home owner's insurance active.

Make sure that you screen any possible tenants thoroughly as you will want to have tenants that have good credit and will take good care of the home. You may have to go through the rental process every year so that is something else to consider.

I suggest that you speak with an experienced local agent to determine what the value is of your home currently to assist you in making a decision.

Good luck!

Laura Feghali
Prudential Connecticut Realty
0 votes Thank Flag Link Tue Sep 13, 2011
Different ideas depending on your age, I will pick age 50 or younger. I would take a 15 year fixed equity loan on the one that is paid for. Buy another one with a 15 year loan and rent them both. This way I would have 2 paid off homes contributing to my retirement.
0 votes Thank Flag Link Tue Sep 13, 2011
Try listing the property both ways.......both for sale and for lease.
You can then take the sweetest deal!!
Web Reference: http://www.321property.com
0 votes Thank Flag Link Tue Sep 13, 2011
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