Why Lease Rather Than Sell Your House?

Because it's economically sensible to do so. Here are five considerations:

• You've already done the hard part. The most difficult part of investing in real estate is asset acquisition. It's expensive in both time and money. If you already own a house, you've accomplished that part. All that's left is managing the asset, and if you don't have the time or inclination to do that yourself, you can hire it out to a professional property management company.
• Short-term tax benefits. You'll enjoy the tax benefits of depreciation and operating expense deductions.
• Positive cash flow potential. You'll likely see modest positive cash flow in the early years, and potentially substantial cash flow in the years that follow.
• Long-term appreciation. You'll benefit from long-term property value appreciation.
• Protected, accessible value. Throughout the holding period, your value is protected, and you can draw against it with a home equity line of credit if necessary. Over the past 200-plus years, real estate has proven to be one of the most secure investments in the United States.

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Why Sell Rather Than Lease Your House?

Because it's economically essential to do so. Here are four scenarios that support selling:

• You need the cash to buy your next home. If you must purchase another home and don't have the financial standing to pay all cash or qualify for a mortgage, the proceeds from selling your current home may be necessary for your down payment.*
• You've lost your source of income. If you're unable to pay the mortgage, retaining the property could threaten your credit standing.
• You're ready to enjoy the fruits of your labor. If you're approaching or already in retirement, you may no longer be interested in portfolio growth.
• You've found a better opportunity for your cash. A stronger investment opportunity may make selling the smarter move.

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*Note: There's an alternative for obtaining down-payment cash that lets you keep the asset as a rental. If you have substantial equity in the home and interest rates are favorable, a cash-out refinance may be an option. A home equity line of credit may also work, provided the combined payments on the first mortgage and the line of credit don't severely impact the rental's cash flow.