Reply to Should I sell my house or rent it out?

Forum Index » Money and Finances

Reply to "Should I sell my house or rent it out?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous]Take it and invest it. After investing for 20 years at 6% interest, your initial investment of $650,000 will have grown to $2,084,638 with literally ZERO outlay on your part. Meanwhile, that house in Reston will have property taxes, repairs, etc. and even if it's paid off will absolutely COST you money year over year.[/quote]

Isn't her house paid off and she will make rental income? Your scenario assumes the house only carries costs and appreciate with inflation if at all.  She can take rental income and invest it in the markets. She needs to calculate how much rental income she will net and compare with the performance of her market investments. She isn't likely to do better in the markets than she is already doing, because this assumes re-education and for her to change her strategies.

Another question to ask is whether she wants to pass the house on to her kids.  She needs to do the numbers, that's the bottom line.  Also, it is beneficial for her to sell and not pay cap gains tax on her appreciation now before it gets rolled over into a rental property.  But then she gets to deduct expenses of rental maint. from her income as well as depreciation. Depending on her income bracket she may get tax breaks and invest the money she would have had to pay in taxes each year.

What you say (cash out, pay no tax and invest the whole 600+K in the markets that will continue growing steadily with a rather high rate of 6% and with no risk) sounds tempting and convincing, but I don't think counting on markets consistently returning this for the next 2 decades is realistic.  You are looking at the past  performance, but then the same rule has to apply to housing market where properties keep appreciating.  Yet we don't believe this will continue and believe housing prices may actually drop or barely keep up with inflation.  What makes you believe markets will keep rising in that scenario?[/quote]

The stock market consistently returns 7%+ over time.  So as long as you take it out of market a few years before you actually fully need it you should be good....market is the simplest way to get a good return.  Much less risky than a rental house, especially one that's older and will need work. What if you go 3 months between renters, then your profits for the year might be gone. [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics