When you have a Kirkland property or a property in another area, and you’re ready to move out of it either to buy a new home or to relocate, there’s a huge decision that needs to be made: Should you sell that property or rent it out?
If you sell your property, you have the advantage of accessing the money immediately. But, if you’re not putting that money into another real estate investment or a new primary home, you have to decide what to do with the money. Maybe you want to invest in the stock market or bonds. These are good alternatives, but the better option may be to rent out your home instead of selling it.
There are many advantages to renting out your property in Kirkland; we’re discussing three of them today.
Kirkland Rental Property and Investment Performance
First, consider the investment performance as compared to other available investments. When you buy a property for $500,000 with 20 percent down, you’re spending $100,000 in cash. That same property probably goes up 10 percent in value. We see that often over the course of time; there’s a chance you’ll even earn much more, but let’s say 10 percent.
The beautiful thing about owning real estate is that you aren’t only getting 10 percent on the $100,000 you put in, but also on the total value of property. So, if the value goes up 10 percent, that’s $50,000. You’ve earned $50,000 on top of $500,000. That’s great, but what’s really great is that you also earn 50 percent on the $100,000 you spent. Compare the investment performance of real estate to the stock market, and you’ll see the benefit. With stocks, you’re lucky to earn an eight percent return. The increase in real estate value is tough to match.
Tax Advantages with Kirkland Rental Property
There are also a number of tax advantages that come with owning rental property. We recommend that you talk to your CPA or an accountant for further details, but you can expect a lot of extra help in reducing your tax liability. Rental property allows you to deduct for depreciation, which saves you a lot of money in taxes. You can also write off expenses associated with your investment, such as property taxes and property management services. It’s an advantageous investment opportunity for tax purposes, and a great reason to keep your property and rent it out.
Real Estate Provides Options
With real estate, you have a lot of available options. It’s a tangible asset, which means you can move back into the house if you need to or want to. You can do short term rentals for a while or hold onto the property until it’s completely paid off, at which point you’ll really earn some money on the sale. There are a lot of options, and it always retains value. Even if the market goes down, over the years you will keep and increase your investment value. Historically, value goes up, so for most people it makes sense to hold onto a real estate investment. You can use it as a wealth generating investment.
If you have any questions about real estate investing or property management in Kirkland, please contact us at SJA Property Management.