How to Know When You Should Sell Your Rental Property
by Dino Alexander, REALTOR®, Principal Broker, Alexander Maxwell Realty
Hudson Valley used to be a summer vacation destination for generation, however, the way we live and work has changed. Thanks to advances in technology, many are able to work form their home office and choose to live outside of busy cities like New York. In the same time, the number of vacation homes in the Hudson Valley and specifically in Catskills, Woodstock area has declined and many of summer homes became permanent residences.
If you have a rental property in the Hudson Valley, you may start to consider whether to continue renting it out or to sell it. Maybe you inherited the house from another family member or you decided to invest in several rental properties. Whatever the case may be, here are three items to consider when deciding if you should sell your rental property.
If your rental property is creating a profit, keeping it might make sense to you. Aside from irregular costs such as minor repairs and when the property sits vacant, your property should be bringing in money. However, if the property is due for expensive repairs soon, you may consider selling it unless you are committed to making it work in the long run.
If you plan to fund your retirement through your rental earnings, you may not be as willing to sell your rental property, especially if it is one that brings in a lot of money every month. A different option you can take it to sell the house and use the profits to invest in a fund. Doing this may give you a decent return when it comes time to retire. Selling or keeping a rental may give you certain tax benefits as well, which can impact how you save for retirement. Work on some calculations or speak to a financial advisor on what works well with your future plans.
Even if your rental property is making a profit, it might not make the most financial sense to keep it if you are living paycheck to paycheck. If an unexpected major expense occurs, you have to consider how you will pay for it. Instead of putting yourself through significant financial strain, consider selling the property.
There is no right or wrong decision on whether someone should sell their rental property. It may be hard to let go of the property, especially if it has sentimental value such as it being your starter home that you held on to after upgrading. The best way to make a decision is to look at your current financial situation and your future goals. Next, think about whether selling or keeping the rental property is the way to reach those goals.