Renting out a property that you’ve inherited is one way to become a real estate investor without actually buying any real estate. It’s an ideal situation, if this is a path you’ve thought about taking. You can earn some consistent rental income as well as long-term ROI as your property in the greater Williamsburg area increases in value.
However, there’s a good reason or two to sell the home as well. The market is beginning to shift right now, with interest rates rising and homes remaining available for longer. If selling is what you want to do, we recommend that you get it listed as soon as you can.
Deciding whether to rent or sell the property you inherited will depend on how you feel about short term gains versus long term gains. It will also depend on what your own financial plans are for the future.
Here are some things to consider when deciding whether you should sell or rent the investment property you’ve inherited.
Sell if You Need the Cash and You Don’t Want to Own Santa Cruz Rental Property
First, let’s take a look at why you might want to sell.
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You Need the Money
When money matters require you to liquidate the asset you’ve inherited, selling is a no-brainer. If there’s college tuition to pay or a big vacation you’ve been dreaming about or you’d really like to get yourself out of debt, selling a home is a good way to fund your most important plans.
You have a property that you don’t need, so it’s easy enough to sell it, earn some money, and walk away from the responsibilities that come with owning a property.
Prepare for some market shifts. You may have to be more competitive with your asking price, and you should prepare to negotiate with potential buyers who know that things are shifting in their favor. Work with a great real estate agent when you’re selling the home you’ve inherited and you’re hoping for a specific asking price.
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You Don’t Want to Rent the Home Out
Renting out a property is a great idea for a lot of reasons, but it’s not for everyone. Maybe you worry that you’re too emotionally attached to the house and you can’t stand the idea of tenants renting it. Maybe you don’t want to invest in repairs and maintenance in order to make the home rent-ready.
Even the best tenants can do unpredictable things. They are living in your home, making messes in your home, and potentially damaging your home. That’s a lot of risk for some people, especially if you never planned to be a landlord in the first place.
To rent out a property effectively, you need to treat it like a business. You need to detach from it and stop thinking about it as a piece of personal property. If you can’t do that, we recommend selling the home you’ve inherited.
Rent Out Your Santa Cruz Property When You’re Interested in Long Term Gains
Selling a home you inherited is not your only option. You can also live in it.
Or, you can rent it out.
Renting out a property doesn’t have to be complicated. If you’ve wanted to invest in real estate and you haven’t had the funds to get started, you’re in a very strong position now. Here are some good reasons to hold onto the property you’ve inherited.
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Santa Cruz Rental Values are High
The Santa Cruz rental market is great for owners right now. More and more tenants are flooding the market, many of them priced out of the sales market entirely. This means you can earn high rents if you have a desirable home that good tenants will find attractive. There’s an increasingly competitive rental market in Santa Cruz, which has driven rental values up. If you decide to rent out your home, you’ll find you have a stable pool of well-qualified tenants who are willing to pay top dollar for a great rental home.
Earning monthly rent is a huge advantage, especially if your inherited property comes with a lot of equity already built into the asset.
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Maybe You’ll Need that Home One Day
Plans can change quickly, and California real estate is valuable. Maybe you’re not planning on moving into the home you’ve inherited right now. But, might you want it for yourself in a few years? Ten years? Or when you retire? Perhaps you have children who might need a place to live in Santa Cruz in the not-too-distant future?
These are good reasons to keep the property.
There’s no way to know where prices will be in a year or 10 years. Trying to buy a new home in Santa Cruz at that point in the future may be nearly impossible for any number of financial and logistical reasons. By keeping your asset, you know you’ll have a place to live if you need it. Real property is tangible. It provides housing.
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Rent Out Your Santa Cruz Home for Tax Benefits
Renting out a property can be beneficial from a tax standpoint. You can deduct for a number of things, including:
- Interest paid on your mortgage
- Depreciation
- Expenses associated with the property, including maintenance and mortgage interest and professional services like accounting, legal fees, and property management.
- Travel costs of getting to and from your rental property.
Talk to your CPA or your tax accountant. Rental properties are excellent for tax purposes.
As you think about what you want to do with the Santa Cruz property you’ve inherited, take some time to consider where you are financially right now, and where you’re hoping to be.
If you think you’d like to rent out the home but you’re not sure you’d make a very good landlord, don’t worry. You can easily partner with a Santa Cruz property management company like ours. We handle all the leasing, management, and maintenance on behalf of owners who do not have the time, knowledge, or resources to effectively rent out a home.
We’d love to talk about your options. Please contact us at Portola Property Management.
