To RENT or to SELL? 5 Questions to Help You Decide

To RENT or to SELL? 5 questions to help you decide. 

1. Is your property rent controlled? The answer may surprise you, as both the State of California and the City of San Francisco rent control ordinances have changed in recent years. There are two parts to rent control: The piece that limits rent increases, and the piece that limits evictions. Some properties are subject to one but not the other. It's essential to understand your rights as a property owner before deciding to rent. Also make sure to understand the limitations on short and mid-terms rentals in your municipality, if you're considering either one as an option. 
2. What's the sales price & rent price? For a decision this big, don't rely on Zillow or Redfin, which can sometimes be wildly inaccurate. We can provide you with an accurate market analysis showing the current market value of your property AND the costs of transacting, so you'll have a real net proceeds number. We also partner with an excellent property manager who can tell you what rent the property would fetch, and the costs of management. **Also don't forget to account for repairs, vacancies, and utilities.
3. What are the capital gains implications? If you've been living in your property for 2 out of the past 5 years, you likely qualify for a $250k (single) or $500k (married) exemption for capital gains. If you've already been using the property as a rental, you might consider a 1031 Exchange in order to defer gains. 1031 timelines are tight, so you'll want to have an idea of what your next purchase will be. Your CPA should be at the top of your call list when weighing your options.
4. What's your long-term investment strategy? Bay Area real estate is famously an outstanding long-term investment. Whether or not it's right for your portfolio is a personal and complex question. Talk to your financial planner, and consider liquidity, opportunity cost, and diversification before making the final call. 
5. Are you ready to be a landlord? When it comes down to it, some people just don't want to be landlords. A great property manager helps (a LOT). But there are always some headaches and things to manage along the way. Decide how much time and energy you are willing to devote to the process. 
   
   

Need help? Email us at [email protected]. We can walk you through all of the above, and connect you to CPAs, property managers, and anyone else you need on your "advisory board".