If you plan to sell this home in the next 5 years- No, it is not wise to rent it out. Rents on single family homes in Mesa county have been dropping the past 6 months as a result of two many single families homes on the market. Chances are rents will continue to drop for the next year and so will the sales price on your home. Your best bet is to price your home aggressively and try to sell it today. Its a tough market, tighten your belt and get aggressive.

I have long been an advocate of owning rental property. Ownership of investment property is one of the most popular wealth building avenues. Now is the time to move up to your new home and use you previous home as a rental. Not all can do this, if you want the advice of a professional property manager, you may call us for an assessment of your situation and what may best suit you. Read "The Automatic Millionaire" to learn more about a conservative approach to developing a portfolio of investment properties.

There could be many reasons your home is not sold. If you could send me some info I could give an honest opinion as to why for you. If you have the ability to use it as a rental and keep the property on your asset side of your personal financial statement and don't need to sell it then by all means keep it. Property management however is not for everybody. Also you have many tax issues when you go to sell a investment property someday. You accountant should be able to inform you as to what those are. I hope this gives you some things to think about.

Hi John,

Many people in your same situation are electing to go the "rental route." They feel, as you do, that they can buy some time, cutting expenses while waiting for the market to improve.

45 days on the market is not a long time. Consider making some inexpensive upgrades that will enhance your selling prospects. planting flowers, yard work, painting, cleaning, and organizing

Good luck

John...Some of this depends on how you planned to purchase the next house. If you are financing then it would be best to put this question to your mortgage lender to see if it affects your ability to qualify to buy the house under contract. The rental could be considered a liability (debt) even if it has a positive cash flow. You will also need to know what is a reasonable rental rate for your current home, be realistic here, again if you're getting a loan the lender will need this information. I would say the next step is to honestly evaluate your attachment to your current home. Some people have a hard time with being a landlord and putting up with normal wear and tear on their property, let alone damages.

If you get past these concerns, a rental can be a good tax write-off (consult your tax person), and a good equity builder while you wait for the real estate market to rebound in your area. One of the best ways to avoid problems with a tenant is to qualify them, extensively. Credit reports, Criminal Background Check, rental referrals for all the adults on the lease are just some of the ways to qualify a tenant. Having a firm written lease with late penalities, damage clause, deposits and so forth is also critical, and information can probably found on your state goverment's real estate laws and forms website. Even though you are not an agent, there are laws you'll need to follow. You can also hire a real estate management company to do the legwork and manage the property.

This doesn't cover everything, but I hope it's helpful.

I checked Chris’s response with a thumbs-up. That was a very good response to your question and covered a number of the legal challenges. The question that I would ask, if your purchase is not contingent on the sale of the first home, is: what else would you do with the net gain of the sale?
If you want to keep the investment in real estate it would be a little more diversified in two properties rather than one. I’m assuming that they are in different parts of town and have different number of bedrooms?
I love Grand Junction. I have some very fond memories of coming into and out of the Rockies there.

Hello John,

You're buying and selling in the same market. Most people consider this a Buyer's market. If you want to sell your home in this market then you need to price it where it's attractive to a buyer. If you have the ability to purchase the other home right now while prices are a bit lower and keep your current home for a rental, it seems to me like that's the best way to go. That's if things happen the way we're all hoping they happen and the prices go back up. If you wait to sell your home in a Sellers market and also wait to purchase your next home in a Seller's market, then you're not really gaining anything and perhaps even losing if the next home is bigger and/or better. I hope that helps.

Sandy Kinslow

Hello John,
I'm writing with the notion that the contract on the home you are purchasing doesn't require you to sell the other home. If so, make sure that you check with your loan officer about changing the sales contingency to a rental/lease contingency. The underwriters are going to want to know about the change, and will eventually want to see your lease. Also, check with your agent regarding your contract on the purchase. You may have to disclose to the seller that you are taking the home off the market in order to rent it instead. Laws and contracts differ greatly from state to state, so make sure you don't put yourself in a tight legal position. Also, make sure the listing agent on your home is okay with giving you a release from your listing agreement. Another note, 45 days is not a very long time at all, especially in this market. I'm not sure what the average market times are in your area, so maybe you need to give it a little longer. If you are seeing minimal activity, then maybe you need to consider a price reduction and some alternate marketing strategies. In my neck of the woods, one showing per week is pretty good. You can't expect buyers to be beating down the door right now. My advice, if you are approved to move forward on the home you are buying without selling, then you should do so. If you've got a good buy and the home suites your needs, then don't let it get away. Maybe you can find a good tenant to help with mortgage payments for a few years until the market picks up. Sure, you will probably have to put a little money into cosmetics to cover your tenent's tracks, but you should end up with more equity in the long run. I hope this helps. Good luck to you!