Better to rent previous home or sell

[Diego Mamani]

Inflation over the next 10 years will be significantly higher than over the last 10. That means that your rental income will go up susbtantially, while your mortgage payment will remain fixed. My advice is to keep it as long as the cash flow is positive and the upkeep is not much of a headache.

When I was a grad student in L.A. in 1995-1997, I used to rent a 2-BD apartment for $850 in a small 12-unit building. The rent was a little below market for the area, but that was the landlady’s strategy for retaining tenants with low turnover. At some point she decided that management was too much work for her and sold the building.

I recentlty checked what those units rent for today, and they go for $1500! She should’ve held the building for longer!

In your case, there’s going to be a “hot” real estate market sometime in the next 10 or 15 years (just like we had in ’79, ’89, and ’05). You can sell it then at a really handsome profit.

[SD Realtor]

Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses. Don’t forget to recap your depreciation though. On the other hand keeping that home for the long run is a sweet idea if you can tolerate that. Assume renters will treat it poorly. Some will not but most will.

[SD Realtor]

Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses. Don’t forget to recap your depreciation though. On the other hand keeping that home for the long run is a sweet idea if you can tolerate that. Assume renters will treat it poorly. Some will not but most will.

[SD Realtor]

Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses. Don’t forget to recap your depreciation though. On the other hand keeping that home for the long run is a sweet idea if you can tolerate that. Assume renters will treat it poorly. Some will not but most will.

[SD Realtor]

Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses. Don’t forget to recap your depreciation though. On the other hand keeping that home for the long run is a sweet idea if you can tolerate that. Assume renters will treat it poorly. Some will not but most will.

[SD Realtor]

Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses. Don’t forget to recap your depreciation though. On the other hand keeping that home for the long run is a sweet idea if you can tolerate that. Assume renters will treat it poorly. Some will not but most will.

[Ren]

I like to think in terms of other people’s money. 30 years of PITI being paid entirely by someone else is a beautiful thing, and a couple of paid properties can make up most of your retirement income. If one becomes a maintenance hassle, sell it and buy newer construction.

Try to detach yourself from the place emotionally. Drywall can be repaired (and even whole sections replaced for not much $), nail holes filled, flooring replaced. Knowing you could fix a place up as good as new IF you wanted to, will help you accept a do-it-yourself patch job on the occasional doorknob-shaped hole. I would not personally want to live with a doorknob-shaped patch in my own wall, but renters are usually okay with it, and I’ll concentrate on making the house that I call “home” perfect.

Price below market and thoroughly check references, and you’re much more likely to get a respectful tenant.

[Ren]

I like to think in terms of other people’s money. 30 years of PITI being paid entirely by someone else is a beautiful thing, and a couple of paid properties can make up most of your retirement income. If one becomes a maintenance hassle, sell it and buy newer construction.

Try to detach yourself from the place emotionally. Drywall can be repaired (and even whole sections replaced for not much $), nail holes filled, flooring replaced. Knowing you could fix a place up as good as new IF you wanted to, will help you accept a do-it-yourself patch job on the occasional doorknob-shaped hole. I would not personally want to live with a doorknob-shaped patch in my own wall, but renters are usually okay with it, and I’ll concentrate on making the house that I call “home” perfect.

Price below market and thoroughly check references, and you’re much more likely to get a respectful tenant.

[Ren]

I like to think in terms of other people’s money. 30 years of PITI being paid entirely by someone else is a beautiful thing, and a couple of paid properties can make up most of your retirement income. If one becomes a maintenance hassle, sell it and buy newer construction.

Try to detach yourself from the place emotionally. Drywall can be repaired (and even whole sections replaced for not much $), nail holes filled, flooring replaced. Knowing you could fix a place up as good as new IF you wanted to, will help you accept a do-it-yourself patch job on the occasional doorknob-shaped hole. I would not personally want to live with a doorknob-shaped patch in my own wall, but renters are usually okay with it, and I’ll concentrate on making the house that I call “home” perfect.

Price below market and thoroughly check references, and you’re much more likely to get a respectful tenant.

[Ren]

I like to think in terms of other people’s money. 30 years of PITI being paid entirely by someone else is a beautiful thing, and a couple of paid properties can make up most of your retirement income. If one becomes a maintenance hassle, sell it and buy newer construction.

Try to detach yourself from the place emotionally. Drywall can be repaired (and even whole sections replaced for not much $), nail holes filled, flooring replaced. Knowing you could fix a place up as good as new IF you wanted to, will help you accept a do-it-yourself patch job on the occasional doorknob-shaped hole. I would not personally want to live with a doorknob-shaped patch in my own wall, but renters are usually okay with it, and I’ll concentrate on making the house that I call “home” perfect.

Price below market and thoroughly check references, and you’re much more likely to get a respectful tenant.

[Ren]

I like to think in terms of other people’s money. 30 years of PITI being paid entirely by someone else is a beautiful thing, and a couple of paid properties can make up most of your retirement income. If one becomes a maintenance hassle, sell it and buy newer construction.

Try to detach yourself from the place emotionally. Drywall can be repaired (and even whole sections replaced for not much $), nail holes filled, flooring replaced. Knowing you could fix a place up as good as new IF you wanted to, will help you accept a do-it-yourself patch job on the occasional doorknob-shaped hole. I would not personally want to live with a doorknob-shaped patch in my own wall, but renters are usually okay with it, and I’ll concentrate on making the house that I call “home” perfect.

Price below market and thoroughly check references, and you’re much more likely to get a respectful tenant.

[enron_by_the_sea]

[quote=SD Realtor]Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses..[/quote]

Is that really true? I have been told that operating losses in a year are considered passive activity and can not be used to reduce taxable income or investment income. Not sure about cap gains though.

If it is true, what is the basis for capital gain? The original purchase price or market value at the time when it turns into a rental?

[enron_by_the_sea]

[quote=SD Realtor]Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses..[/quote]

Is that really true? I have been told that operating losses in a year are considered passive activity and can not be used to reduce taxable income or investment income. Not sure about cap gains though.

If it is true, what is the basis for capital gain? The original purchase price or market value at the time when it turns into a rental?

[enron_by_the_sea]

[quote=SD Realtor]Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses..[/quote]

Is that really true? I have been told that operating losses in a year are considered passive activity and can not be used to reduce taxable income or investment income. Not sure about cap gains though.

If it is true, what is the basis for capital gain? The original purchase price or market value at the time when it turns into a rental?

[enron_by_the_sea]

[quote=SD Realtor]Yeah that 2 out of 5 years exclusion is nice. Even if you pass that exclusion though, if you have cap losses you are carrying forward from perhaps stocks or something, if you sell the home as a purely income property you can line that gain up against those losses..[/quote]

Is that really true? I have been told that operating losses in a year are considered passive activity and can not be used to reduce taxable income or investment income. Not sure about cap gains though.

If it is true, what is the basis for capital gain? The original purchase price or market value at the time when it turns into a rental?

[Author]

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