Deciding whether you want to rent or sell your Dallas-Fort Worth property is a personal decision that will often depend on your current financial situation and your future investment goals. The market right now is unusually hot. If you’re thinking about selling your home, it certainly makes sense. You’re likely to earn a good price on your home.
However, it’s also a great time to hold onto that asset and rent it out. Holding a Dallas investment property is an excellent way to earn cash flow in the short term and impressive returns in the long term.
There’s no easy formula for figuring this out, but today we’re sharing some of the things we encourage our clients to consider before they decide to sell a home, especially when renting it out makes more sense.
Evaluate the Local Real Estate and Rental Markets
In a market that’s favorable to sellers, when you can get the asking price you want, selling is an excellent opportunity to access your equity and walk away with an impressive profit. We are in a market like that right now. However, in a market where the supply outpaces the demand, you could be looking at a lower sales price and an increased number of days on market, which makes selling less attractive.
Make sure you understand the sales market and where your property fits into it before you sell. Take a look at the rental market, too. You may be surprised at what you could earn renting out your home.
Deciding to Sell for Cash and Equity
Selling is a great idea if you’re simply ready to not own this particular home anymore. It’s also a great idea if you need access to cash and equity. Selling your property can deliver a predictable sum of cash, especially if you have enough equity in the home and you know the sales market will deliver the price you want. If you need the money for a down payment on a new home, to send someone to college, or to begin your retirement elsewhere, selling could be an easy way to move on.
Benefits of Renting Instead of Selling
Holding onto your asset and renting it out won’t deliver a big payday right away, but it will set you up for some financial security now and in the long term. Your home will continue to grow in value while your tenants pay down your mortgage. Then, you can expect a nice profit when you do sell in a year or two years or five or 10.
You’ll enjoy consistent rental payments coming in every month, which will help you cover the expenses of your investment. Depending on the rent you earn, the entire mortgage payment could be covered.
The Dallas-Fort Worth rental market is stable. The population is growing and there’s a good pool of well-qualified tenants who are looking for long term rental homes. We also have a steady demand for short-term accommodations thanks to the tourists and vacationers who arrive looking for a place to stay while they’re visiting Dallas-Fort Worth.
Taxes Change When Renting or Selling
Taxes will also be affected based on whether you rent out your home or sell it. Selling could require a capital gains tax, whereas with rental property, you’re able to take a number of deductions that will ultimately reduce your tax liability.
You can deduct the home’s depreciation and any expenses associated with the home, such as rental property maintenance and professional services like accounting, legal fees, or property management.
When you decide to rent, a Dallas-Fort Worth property management partner can ensure you earn as much money as possible with very little work on your end. We’d be happy to help you work through this decision if you’re thinking about selling but curious about renting. Contact our team at Assign Property Management.