Sell And Rent Back Makes Investment Sense

Although the real estate market is currently experiencing a downturn, it still has the potential to be a money maker. While an investment firm has the capital to last through short-term fluctuations, an individual investor lacks the same resiliency. You are better off selling a hunting property than keeping it in your portfolio. At times of economic uncertainty, diversified investments are the safest.

The rental home industry may not be the best option for the average investor. This particular field requires knowledge and research best left to experts. Keeping a diversified portfolio controlled by experts is the safest way for small investors to protect their capital assets.

In the past, during real estate boom years, buying houses for quick sell was a great way for young and enthusiastic people to make a significant amount of money. However recently, as the market has declined, many people have adopted a different strategy. They sell and rent back ensuring continued use of the property.

Many investors who have large amounts of capital tied up in real estate, be it their personal residence or a vacation cottage, come to the realization that this capital would be better that invested in other assets, such as stocks, bonds, hedge funds, or gold. Investors can free up the capital tied up in real estate for other investments while still retaining the use of the property by employing the sell and rent back model, under which their personal residence and vacation cottages are available as homes for rent back.

For sponsors who like to hunt and enjoy the outdoors, the model of sell and rent back frequently make a lot of sense. In the past, having a timeshare for infrequent use made a lot of financial sense. Growth of suburbs where these properties were located often caused their value to increase dramatically. However, this situation has gone away. Those who enjoy the outdoors have more money, and have gained more economic independence by getting rid of these types of properties.

You can get the best of both worlds by renting your hunting property to a well-funded capital investor. The financial assets would be put to a better use, and one can write off the leisure expenses in tax-friendly way. This is especially true when a business justification for using the rented property is available, which is often the case in these matters.

The real estate market boom of the nineties and early 2000′s made it possible for many people to make large amounts of money by buying houses for quick sell. Now that the real estate market has changed and is contracting in many parts of the country an opposite strategy makes more sense. People would now be wiser to sell and rent back real property. Many investors who have large amounts of capital tied up in real estate come to the realization that this capital would be better that invested in other assets: their personal residence and vacation cottages are available as homes for rent back.

- Peter Shukla

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