Should I sell my house or rent it out?

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Dan260
Member
@dan260
Join Date: 2002
Post Count: 22
November 28, 2002 - 6:28 am
Hi all fellow investors,
I have 2 investment properties in addition to my principal place of residence. We have now outgrown our small house and are moving somewhere bigger.
My question is this:
Should I sell my principal residence and take the tax free cash or should I rent it out?
The principal residence has $88,000 mortgage remaining on it and Market value is $140k. Rental for this property is $145 per week. Is my effective yield if i rent it out = 8.5%? And what are my tax implications?
I really am unsure of what to do so any comments would be greatly appreciated.
Thanks in Advance
Dan
Bruce_4
Participant
@bruce_4
Join Date: 2002
Post Count: 13
November 28, 2002 - 1:27 pm
Hi Dan
It would be great to hold the property for the long term and the cashflow should improve over time as the loan it paid out and the rent increases.
However, you would be buying your new home at the full mortgage (assuming you have no spare cash) which would be of no tax advantage and after tax cost in repayments.
As most property guru’s say, pay off the bad debt or your own home as fast as you can, so that you can then start to invest with the money available.
My 2cents worth.
Regards
Bruce []
AD
Participant
@ad
Join Date: 2002
Post Count: 636
November 28, 2002 - 2:00 pm
Hey Dan,
Tough call to make without all the facts but it really depends what you are doing and wanting to do. Are you buying another house to live in or are you going to rent? What is your aim in life to build cashflow or grow capital gain? On face value 50K in the pocket is nice (no tax) and it may be needed to purchase your next house. If you are going to rent it provides quite a few 10% deposts getting you into more than just the one house that you currently have all the money tied up in. If it were me I will always take the easy $50K but then I would invest it to make it turn into 2-4 properties that make me more money. The upside for you Dan is that you have a few options and you need to decide where the end point of the journey is and only do things that get you closer to that point.
Hope this helps
Enjoy
AD [:0)]
A great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney Smith