Should I sell my condo or lease it?

Hi William,

My son is moving out of his condo we bought for him for university and now that he is graduating we are considering selling the condo. We were also considering leasing the property since it is a university student area and rents are almost double what we owe in mortgage. What do you think we should do?

Darryl H, Santa Monica 

Hi Darryl,

How smart that you purchased a property for your child to live in while they attend university! As much as I would love to sell everything, I also want your referral business for life so here’s the real deal.

Are you familiar with the tax benefits of owning a rental property? I suggest you dive a little deeper into my blog articles. There’s an entire blog dedicated to this topic and we include the advice from our expert CPA Dennis Duban.

If you can pay the mortgage and collect passive income, I would not sell the property. With limited inventory, prices are continuing to climb. University towns are a great place to continue to collect healthy revenue streams through rental income.

Instead of selling, maybe your son would be interested in trading the condo for a multi unit property where he can live in his own and collect income from the tenants! In this case, you would be able to sell the condo for a multi unit property - but you would need to rent out the existing condo first in order to complete a 1031 exchange and avoid paying capital gains at the close of sale.

For most people, the hardest part in real estate is coming up with a down payment. So long as you continue to grow the equity of your property, son will continue to benefit from the growing portfolio in the years to come.

William