This content was created by Joe Homs 949-625-4533. This content was uploaded by Joe Homs 949-625-4533. This is a YouTube video titled "Should You Rent Or Sell? | Real Estate Investing" (created 2022-03-15) featuring Joe Homs (broker, investor, and mentor with ~40 years experience) presenting a solo, instructional talk for new and experienced real estate investors. Joe outlines reasons to rent (positive cash flow, passive income/mailbox money, holding through a down market, the option to return, tenants paying down your mortgage) and reasons to sell (possibly better ROI and principal-residence capital gains exclusions of $250k/$500k, avoiding tenant management, avoiding capital expenses, poor rental suitability, and freeing cash to fund other investments). He advises running the numbers, evaluating local rental demand, and choosing the option that best fits your goals, with links to beginner resources and an invitation to reach out.
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In today's video, we're looking at whether it's better to rent or sell your property. Coming up next. As with most real estate questions, these are not universal right or wrong questions. But once you understand the options, you can make the best choice for your situation. Welcome to the channel. I'm Joe Homs. I've been a broker, investor, and mentor for over 40 years. I made this channel for the new and experienced investor. Those who want to create the life they've always wanted through real estate. Here are some reasons to rent out your property. Number 1, positive cash flow. So hopefully when you rent your place out, you are getting positive cash flow because if you're not, there's no really any reason to be renting out your place. So make sure that you do all your numbers correctly and that you do have that positive cash flow. Number 2, making a return on your investment. Everybody wants a return on their investment. This is a great source of income. This is passive income. This is what people call mailbox money. Money comes in every month in a form of a rent check that you cash, and then you pay everybody else out underneath you, and then you have cash flow at the end of the day. Number 3, maybe you're waiting out a bad market. I don't normally recommend that, But if you want to hold on to the property because you maybe you bought it at too high of a price and it went back down and now you're waiting for it to come back up, it's always possible to rent it out. And if you have that positive cash flow, move forward. Number 4, you always have an option to return to the property. So the tenant is done, they've left the property, Probably not in the same condition that you got it or you rented it to them, then you can move back in and claim it as your principal residence at the end of the day. Number 5, literally having somebody pay your mortgage. And if you own a property with a normal 30-year loan and you rent it out for 30 years, you've had somebody pay that mortgage down for you. So now you owe zero on that mortgage and you didn't pay a dime of that mortgage payment to the bank, your tenants did. Let's talk about reasons to sell your property. Number 1, better ROI through a sale. You may get a better return on your investment if you sell the property, especially if it's your principal residence, because you can deduct up to $250,000 per person, married couples $500,000 of the capital gains tax on that property. Not like an investment, but a principal residence. And that may save you in the long run on taxes as opposed to converting that property into an investment. Number 2, maybe the biggest reason, you don't have to deal with tenants. Okay. But if you're looking for cash flow, you're looking for appreciation, you're looking for somebody to pay down your mortgage, tenants are a good idea. But if that's not your cup of tea and you don't want to deal with all the issues that involve renting out these days, maybe you ought to sell. Number 3, avoiding capital expenses. So As your property ages, there's going to be issues that you have to deal with. You may have to put a new roof. You may have to paint every 8 years. You may have to put new appliances in. You may have to put new flooring. You may have to paint the property. So maybe it's a good time to sell. That's up to you. Number 4, the property makes a poor rental. And it may, it may not be in a desirable area. It may only be a 1-bedroom condo. You know, there's a lot of reasons that this property may not be desirable to the rental market. So evaluate what you have, find out what's been renting in your area, find out how much is being charged for rent in your area, find out how long it's taking to rent a particular unit or house in your area, and then make your decision whether you want to sell or not. Number 5, you might even be able to fund better rental investments. And if it's your principal residence, this is a great way to take that money if you're not going to buy another principal residence, or even if you are, you buy another principal residence, you put the minimum down, you're going to have this big giant pot of cash at the end of the day that you can take and buy investments with. So that's, that's a great strategy in itself. Not every home makes a good rental. Not everyone is cut out to be a good landlord. Make sure that you weigh all your options and decide what decision will benefit you the most. If you're new to investing and want to get some really good resources to help you, Click on this video right here. I recommend all my favorites for beginners. As always, feel free to reach out anytime. See you on the next one.
