The decision to either sell your home or keep it to rent out as an investment can be a difficult choice. Homeownership is a substantial commitment which requires consideration of many factors, but the main question you should ask yourself is: do I ever plan to return to live in the Bay Area?
If you do plan to return to the Bay Area, we recommend holding onto your home. It can be incredibly hard to get a foothold in our evolving Bay Area real estate market, so if you have one, don’t let it go. As we all have seen in recent years, Bay Area home prices have been skyrocketing with no signs of slowing down. The Bay Area is one of the most desirable places to live and finding an affordable home can be extremely difficult in a sea full of competitive buyers. For this reason, selling your home could potentially eliminate the option to ever move back.
If you are confident that you’ll never return to your home at a future point, the house transitions from a place of sentiment and memories to an asset that is part of your larger investment strategy.
No matter how much you love the hummingbirds in the back or the sunsets in fall, the minute you move out, your home becomes an investment.
The current real estate market is in favor of sellers, which means that you could gain a large profit by choosing to sell your home right now. If you decide to keep your home as a rental and sell later, the market could shift by then and your profit may decrease.
Ask yourself: if I move this investment to another investment vehicle will that be better for me? Here are some things to consider when deciding the best path for you.
Does this home qualify for the primary residence tax exemption? And, does it make sense to capitalize on the tax free gains?
What will the net income or expense be if you hold your home and rent it?
Do you intend to hold long term or will you need the proceeds sooner than later?
What is your threshold for risk? Do you prefer an investment that has less risk?
Will you manage the rental or hire a property manager? Remember to educate yourself on the state and local rent control and eviction laws.
If you opt out of hiring a property manager and are living out of state, will you be able to make frequent trips back to manage and maintain the property?
Only you can determine whether renting or selling is the best strategy for you. Take your time to thoroughly examine your options and weigh the pros and cons of selling and renting. We are available to provide a referral to an excellent financial advisor, talk through our insights, and offer a free valuation of your home!