What are you going to do with your Eureka property that you’re not living in? 

Maybe you’ve inherited an investment property and you’re not sure what to do with it. Maybe you’re moving out of your home or leaving the state and you know you can sell, but you’re looking for another option. 

The sales market has been all over the place over these last few years. Selling will bring in some instant money, and you are still in a strong position if you’re listing a home to sell. Prices may be peaking and there are fewer buyers thanks to rising interest and mortgage rates. You can still make some excellent money on a well-maintained home in a desirable neighborhood, however. 

But, have you considered renting out your Eureka property instead? 

This can be an attractive option, especially if you are only leaving Eureka temporarily and you plan to come back. It’s also a good way to earn some cash flow in the short-term while a tenant pays down your mortgage and your property value increases. 

The ultimate decision will depend on your specific financial needs and your long-term goals. When owners ask us whether it’s better to sell or rent out their Eureka home, we ask them to consider a few important factors. 

Evaluate the Eureka Real Estate Market

In a market that’s favorable to sellers, you can get the asking price you want. Sometimes, you’ll have some offers roll in that are even higher than your asking price. In such a market, selling is an excellent opportunity to access your equity and walk away with an impressive profit. 

However, market conditions have to be what you need in order for selling to make sense. In a market where the supply outpaces the demand, you could be looking at a lower sales price and an increased number of days on market. There’s a lot of inventory and new construction homes continue to gain interest from developers and homebuyers.

Some of the best reasons to sell your home instead of renting it out are: 

• You need the cash. If there’s something pressing you’d like to do with the money you would earn on the sale of your home, it makes sense to sell. You’ll earn money in the long term when you rent out a home, but you won’t get the instant liquidity that you’ll get with a sale. 
• You don’t want to hold onto the property anymore. If you know you’re never going to need this home, you might want to relieve yourself of everything that comes with a real estate asset. 
• It’s an older home and it will need major repairs to be rent-ready. When you rent out a property, you need to make sure it’s competitive in the market and likely to attract great renters. While you can sell a home “as-is,” you cannot rent out a home “as-is.” It has to be safe, habitable, and attractive to tenants.

These are good reasons to sell. Talk to a real estate agent or a broker about what you can expect in terms of an asking price and how quickly you will be able to sell your property and walk away from it.

Renting Instead of Selling: Benefits for Eureka Property Owners

If you aren’t thrilled with the state of the sales market and you don’t need the cash, we always recommend owners consider holding onto their properties. The asset will always increase in value, and renting out a home provides an opportunity to earn more money from it. This delivers a larger profit when you do sell in a year or two years or five or ten. The longer you hold your investment, the more money you can potentially make from it. 

Here’s why you should rent instead of sell: 

• Consistent and recurring rental payments. The rent your tenants pay will help you cover the expenses of your investment, including mortgage payments, taxes, insurance, and maintenance. Depending on the rent you earn, the entire mortgage payment could be covered.
• The Eureka rental market is stable. The population is growing and there’s a good pool of well-qualified tenants who are looking for long term rental homes. You’ll find vacancy and turnover rates are low in Eureka and the surrounding communities. 
• Rental prices are high and they’re also stable. When you can attract and retain great tenants, they will help you pay off your mortgage while your property’s value continues to rise. 

Renting isn’t for everyone. If you are not in love with the idea of being a landlord, make sure you partner with a great property manager.

Another Reason to Rent: Tax Implications 

There may be a capital gains tax on the sale of your home, whereas with rental property, you’re able to take a lot of deductions. 

You can deduct the home’s depreciation, which is pretty generous by IRS standards, and you can also deduct any expenses associated with the home, such as maintenance and professional services like accounting, legal fees, or property management. These write-offs help to reduce your overall tax liability.

Talk to your CPA or your tax accountant before you make a decision to sell or rent out your home. You’ll find there are different tax liabilities and benefits that you may want to consider. 

Work Closely with Eureka Property Managers