CHAPTER 2 To Rent or to Sell? That is the Question
The decision of whether to rent out or sell a vacant home often arises in residential real estate transactions. Real estate is a prime investment. For most Canadians, their home is their most significant investment, with the equity built up in it being of genuine importance in retirement planning. It may be an attractive proposition, either for long-term investment or immediate cash flow, if a homeowner has the opportunity (and the financial ability) to become a landlord and rent out a home while affording to live in another. A family may reach a point where more space is needed, or a change of location is desired, or a new job requires relocation, causing someone to move in while renting out their house to tenants. Other situations where it might be more practical to rent out rather than sell could involve a home that has languished on the market or where the owner is “underwater,” meaning the mortgage is more than the home's value. Renting your home versus selling has many factors to consider. For example, is real estate a good investment in the overall economy? Is the housing market in general moving up or down? If waiting two or three years will result in substantial appreciation of local home prices, or if home prices have been depressed but are slowly rebounding, it may be better to rent out your home than sell now. It makes sense to keep a house as an investment if it shows future growth in worth, provided you have the wherewithal to maintain its value with conscientious renters and appropriate upkeep. In a general down market, it makes sense to hold onto the home and generate rental income until the market recovers. 3
Powered by FlippingBook