Rent or Sell??

I am selling my home to move to a city a few hours away. I have an offer to purchase the home and I also have an offer to rent the home. The house is paid for, market value is dropping slowley on the house. Should I sell or rent. I am new to real estate investing and I am trying to figure out if this would be a good opportunity to start in Real Estate Investing. Any recommendations as to how to go about determining if I should sell or rent?? Recommend any specific books to read?? Help!!! I have to decide in 2 days!!!

In order to get the tax advantages of selling your property you need to have lived in your home two of the last five years. So if you decide to sell it, you’ll be fine. But if you rent it, you will still have a couple of years to decide whether you like renting. If a year or two go by and you decide that this isn’t for you then you can still sell it and get the tax advantages when you sell. If you going to sell it just make sure you list it in the next two years. Plus renting it for two years might give your market time to recover.

Having a rental property a few hours away may be a challenge to keep on top of it. If you go that route, hopefully you know some friends or relatives in the area that can check in on the property for you.

Market could turn around, or it could completely tank. Don’t know where the prop is, so don’t know what could possibly happen.

If you’ve got a solid buyer, someone that is qualified that intends to close, then I’d sell if I were you, especially if you’ve owned the home for at least 2 years.

First, it gives you a large chunk of tax free (if the 2 year is met) money. Stick it in the bank in a good CD account until you learn REI or whatever else you chose to invest your money.

Second, having a destant rental as a new investor will almost guarantee that you’ll NEVER buy another investment. Since the property is free and clear of liens, you’ll probably make money, but the hassle and bother of being an out of area landlord will wear on you quickly. If you do decide that rentals are for you, better to get them where you’re going to be.


Thank you all for the advice!

Personally I would rent it because of the cash flow it will provide. Keep in mind operating expenses excluding the mortgage run 45 - 50% of rent, which includes property management which will be neccessary if you are out of state. The challenge is finding a good property manager. I think it will be hard to replicate that cash flow by investing the proceeds elsewhere. I’m not saying its impossible, but it may be difficult. I don’t like to sell assets(things that put money into your pocket) unless I have a plan to reinvest to acquire more assets and create greater cashflow. Just my .02 cents.

p.s. If you haven’t read Rich Dad, Poor Dad its a good read worth your time and it may help with the big picture, long term.

Sulivan, I think it will be hard to replicate that cash flow by investing the proceeds elsewhere.

If the prop meets the tax exclusion guidelines currently in effect in the U.S., then you can far exceed whatever you could reasonably expect to get from renting the property simply by selling it now.

Don’t know the location or value of the property, so I install some numbers. Assuming a cash to seller of $100K on a sell, tax free income vs. a real world cashflow of $300/month. Now, not counting for interest on the $100K, inflation, time value of money, etc., etc, just simple math, it would take approx 27.5 years of $300/month to just equal the $100K instant cash.

That same $100K simply put into a lowly CD earning 5% annual (current ING offering) makes approx $416/month in interest.


Knowledge is power. I have a lot to learn. Thank you Raj