The real estate market: Most economic prognosticators predict a continuingly healthy real estate market for the foreseeable future. Conservative estimates are that inflation will hold at 2% plus or minus. Investments in real estate, especially financed investments, will benefit from inflation growth. Depending on how we deal with the mounting US debt and worldwide economic influences, this rate could become much higher. Most economists also predict that home prices will continue to escalate as they have for the past two years. In the last two years, some of my real estate investments have experienced better than 40% growth compare to values since the housing bubble burst in 2008.
Financing on either property: In choosing which property to sell, look closely at the financing. If one is free and clear, it might be a great cash-flow opportunity as an investment property. In either case, from a purely economical perspective, it makes sense to be rid of the least favorable mortgage note.
Long-term estate plan: Maybe this would be a strange conversation for a newly wedded or recently engaged couple but if they have a sober understanding of the importance of estate planning, they will not be dissuaded from the discussion. If selling is the solution, problem solved. Just have a plan for investing the equity from the sold property. One idea would be to pay down the principle on the retained house, if it’s financed.
Tax implications to the new couple: What will the combined financial portfolio look like? What level of income will you attain if filing jointly? Does the alternative minimum tax kick in? If so, it could undermine the idea of holding either property as an investment. You would probably lose most of the tax incentive for assuming the investor risk. If you do decide to rent out the property, consider the capital gains benefits of selling before the end of year three, so that you enjoy the benefit of the capital gains tax exclusion.
Temperament to be a landlord: If you think renting one of the properties out makes good financial sense, ask yourself if you have the temperament to be a landlord. If not, consider hiring a professional property manager to manage the asset. Doing so will surely cut into your cash flows a little but it could also save you a lot of money and headache. For these same reasons though, this might be best even if you do think you could handle the emotional aspects of being a landlord.
3 Options Realty
The author of this Blog is neither an attorney nor an accountant. Nothing written should be construed as legal advice. Conclusions conveyed are outcomes based upon practical experience and should not be depended upon to be a common outcome of other similar circumstances. Consult with a professional before making tax or legal decisions about real estate in Roswell, Milton, Alpharetta, Johns Creek, Woodstock or any other Georgia municipality.
If you have been rummaging through web results for “property management companies near me,” then you are at the right place. 3 Options Realty’s property managers in Atlanta are experienced and trained to deliver top-tier service. Call 3 Options Realty to speak with a friendly representative today to learn more about our property management & real estate services. We are ready to take your call.
We use professional market research to determine fair-market rent, and we use broad market advertising to reach a large audience. Our agents will also help you prepare your property and skillfully present your property. Prospective tenants will undergo comprehensive interviews and background screening before we negotiate with them the rental agreement using our proprietary, attorney-reviewed forms.