Choosing whether to rent or sell your condo can be a tough decision. While renting your condominium provides you with a solid source of ongoing income, it can also deprive you of a much larger source of capital.
Like many things in life, the decision you make should be based on timing, with renting a great option when you need to ride out weak market conditions. If you do it right, renting your condo allows you to profit twice, first from the rental income and then from the capital gains when you sell.
The biggest problem with renting is the opportunity cost involved. Defined as the loss of other alternatives when one option is chosen, the opportunity cost of renting is the capital that you could gain by selling.
While renting your condo provides you with a reliable source of income, you can’t take advantage of the equity for other property deals or projects. Once again, this comes down to timing, with patience critical if you want to buy when the market is low and sell when it’s high. There can also be restrictions on renting condos in particular locations or certain times of the year, so do your homework and check with the condo association before you sign a contract.
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