What to do with your Seattle home when planning to move. Should you sell or rent out your Seattle home?
Maybe your family is growing and you need more space. Or, maybe you’re downsizing and looking for something cozy and maintenance-free. Perhaps you’ve bought another property or you’re leaving the area. Will you be back?
Whatever your situation, you’ll need to decide what to do with that place you’ve called home for a year or five years, or maybe 30 years.
Why would you keep your Seattle home?
Why would you sell it?
It’s a complicated decision, and we can help you consider all of your options and the pros and cons that come with each potential choice.
Our blog and video series is designed to educate and inform real estate investors and curious non-investors, whether you’re new to owning rental properties or you’re an experienced landlord trying to grow a portfolio.
Whether you decide to sell or rent that property, we’re here to simplify the entire process and help you feel more comfortable with your decision.
Here’s what you need to think about when you’re wavering between just selling your home and being done with it, or holding onto it as an investment property in Seattle.
Reasons to Sell Your Seattle Home
You may have noticed this real estate market is hotter than hot. It’s sizzling. It’s making reasonable people do crazy things.
This competitive, fast-moving market has a lot of our clients wondering if cashing out is smart right now. Does this make the most sense for you, or should you keep your home and rent it out?
Let’s take a look at some of the benefits to selling your home.
- First, you get to cash out all the equity that you have in the property. This is a good time to get more than your asking price. If you know you’ll make a lot of money and you have reasons for needing to get your hands on that cash right away, selling is obviously a great idea.
- You can perhaps preserve the homeowner tax exemption.
- You’ll relieve yourself of the liability that comes with renting out a property. You won’t have to worry about tenants or maintenance or vacancy.
- You can use the money you earn on your sale to invest in a more passive asset like stocks, bonds, or something else.
It makes sense that so many people are choosing to sell. We get it.
But, let’s take a deeper dive into why you may want to keep the property and list it on the Seattle rental market. This is a better option for those interested in creating long-term wealth.
Benefits to Holding Onto Your Home as a Seattle Rental Property
If you’ve ever wanted to invest in real estate but you weren’t sure that you had the money to enter an expensive market like the one we have here in Seattle and Puget Sound…this is a unique opportunity for you to hold onto a valuable investment and begin a lucrative real estate investing journey.
Here are some of the benefits to holding onto your home:
- Owning a rental property in Seattle will allow you to diversify your investment portfolio. Rather than having all your investments in stocks or bonds or a 401k plan, you’ll have property.
- Real estate can also provide passive income in the form of monthly cash flow. Even after running the numbers, if your cash flow is lower or even non-existent, you have to factor in the principal your tenant is paying down. How much of your mortgage debt is being paid by your tenants?
- Tax benefits are numerous when you own rental investments. You can deduct depreciation, interest, operating expenses, and maintenance. Owning rental homes is very beneficial from a tax perspective.
- You have options when you keep your property right now. You can move back into it. You can sell it later. You can provide it to a family member a few years from now. You can rent it out for a few years and then sell, moving the equity into a different property such as a multi-family building.
- Owning real estate is a great hedge against inflation, even as prices increase. With a fixed rate mortgage, your payment stays the same. Even as you’re able to increase your rents.
There’s also the benefit of property appreciation – forced and natural. This is powerful when you factor in leverage.
Let’s take a look at what that means.
Leveraging Property Appreciation
If you own a property and it appreciates at 10 percent, you’re not making 10 percent on your initial investment. That 10 percent is on the total value of the property even if you only contributed 20 percent of your own cash for the purchase.
Here’s an example.
Let’s say you buy a house at $500,000, and the value of that home increases in value by 10 percent, or by $50,000.
When you purchased the home, you made a down payment of 20 percent, or $100,000.
So, the return you receive on your initial cash is actually 50 percent – from $100,000 to $150,000.
That’s hard to match in the stock market, where you can expect an 8 percent return over time on average.
This is the power of leverage, and it’s why we love real estate investing so much.
The main benefit to holding onto your property as a rental is this: owning real estate creates lasting wealth over time.
Who are We?
SJA Property Management is a premier Seattle property management company serving Seattle, Seattle’s Eastside, and the Greater Puget Sound region since 2009.
We provide sophisticated, personalized, and comprehensive management services for single-family residences, luxury homes, condominiums, and multi-family buildings.
We hope that you found this blog helpful and you’re thinking about the benefits of holding onto that property that you just don’t plan to live in anymore.
We’re here to help you, wherever you find yourself on your real estate investing journey. If you have questions about what we’ve discussed or you’d like to chat about your specific situation, please contact us at SJA Property Management.