To rent or to sell? Which is better?

[Arianna Crawford]

Hello!

My boyfriend and I currently reside in a home we purchased with the intent to maintain it as a rental property when we move. However, since we bought the house, the value has increased quite a bit. Now, the time is coming close for us to make arrangements for the home, and we are torn between selling to use the extra money to pay off a few bills/loans or sticking with the original plan of renting it out as an investment property. We want to make an informed decision that's going to be best for us in the long run. If anyone has any advice on how to make this decision or related stories of successes/losses when it comes to this sort of situation please let me know!

[Cody L.]

This is like asking "What's better, a car or a truck?"

The answer is "Yes".  Or "both".  Or "Neither".   All depends on use/goals. 

[Christina Labowicz]

@Arianna Crawford sounds like you have a good problem on your hands!
Your answer is discovered through a math equation. 

Compare what your current return on your equity is to what the potential return on your equity would be if you rolled it into something else. 

You can look at hotpads.com (craigslist, facebook marketplace, zillow) and get a sense for what homes like yours rents for and ask a local realtor what the value of your home would be right now. Subtract the debt that you own from the current value, you will find your equity. Now divide the NOI from the equity and you will have your current return on your equity, and compare that to if you rolled the same equity into a duplex or triplex.

If you are looking to build wealth, my hunch is your equity would be put to work better in a multifamily than a single family. If you are looking for "safe" cash flow, you could keep it as is. Alternatively, you could borrow against the property and use some of that equity to buy another property. 

[Arianna Crawford]

Thank you to all who responded on this post! We carefully considered all the advice given to us and came to a decision. We ended up contacting a property manager to get some more accurate numbers (sell price vs. rent) and we ended up deciding to rent it out when we move. We considered selling and putting the money into something else. However, since we have no way of knowing where we will be stationed next, it seems to make more sense to hold it as long as we can until we need the extra money for a future investment that we can better plan for. So, thank you again and best of luck out there.

[Bhekizwe M.]

If it was a great buy, meeting your investment standards and criteria, i would keep it irregardless of the market movements.Other strategies like refinancing would be wise