Arizona homes for sale

Should you keep a surplus property or sell it?   Investing in real estate is often touted as a great way to build wealth. Real estate tends to appreciate over time. Even when values do drop, you still have a tangible asset. In addition, there are tax advantages to owning real property. Most homeowners, however, sell one home to buy another, giving little thought to holding onto the old home as part of an investment strategy. Granted, many homeowners sell because they need to liquidate the equity from the old home to complete the new home purchase. But, if you can afford to, wouldn't it make sense from an investment standpoint to keep the surplus property and turn it into a rental property? The answer to this question depends on several factors: the property, the local economy, the personality of the owner and the investment climate. One benefit of holding on to a property you've owned for awhile is that you should be familiar with its strengths, weaknesses and its overall condition. If you haven't attended to routine maintenance, be sure to have the property thoroughly inspected, just as you would if you were buying the property. If the property has major structural problems that will drain your resources, you may be better off selling. Property location is one of the most important factors to consider. Is the property located in a desirable neighborhood with good prospects for appreciation? As with the stock market, there is no guarantee that the value of your investment will increase. But your chances for appreciation improve if your property is located in a community that has a diverse economic base with good growth prospects and a limited housing supply. Before you make a decision, check into the strength of the local rental market. Is it a buyer's or seller's market? Does the investment still make sense if rents decrease significantly from their current level? Will the rental income cover your expenses-the mortgage payment, property taxes, insurance and upkeep costs? Since there are tax implications when you own rental property, you should be sure to consult with your accountant or financial advisor. FIRST-TIME TIP:  One advantage of owning rental property is that you can roll capital gain from one property to another by making use of a tax-deferred exchange (See Internal Revenue Code 1031). This means you can sell one rental property and buy another without paying capital gains tax, if you comply with the 1031 requirements. However, if you want to sell and not reinvest the proceeds in another rental property, you may have to pay tax on your capital gain. The current tax law grants a $500,000 capital gain exclusion to couples, and a $250,000 exclusion to single tax filers, who sell their primary residence if they occupied the property for two of the five years before the sale. Some homeowners are preserving this benefit by reoccupying the property for two years before they sell. Owning property long distance can be a headache. In many locations good property managers can be hard to find. One absentee landlord suffered through maintenance headaches and tenant evictions until he sold at a loss in a down market. As with most investments, it makes sense to have a long-term horizon so that you can ride out a downturn in the market. THE CLOSING:  Being a landlord isn't for everyone. It's a job that takes time and energy. If you have neither, and you can't hire good help, you might be better off selling the surplus property-particularly if you have better investment opportunities. Dian Hy mer is author of "House Hunting, The Take-Along Workbook for Home Buyers", and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books. Copyright 2001 Dian Hy mer Distributed by In man News Features   More - Real Estate Columns   FREE reports on homes sold in your zip code Arizona Homes - All available zip code reports Chandler Homes Gilbert Homes Glendale AZ Homes Goodyear Homes Mesa Homes Phoenix Homes Scottsdale Homes Sun City AZ Homes Tempe Homes   FREE custom-made reports on homes for sale Metro Phoenix Southeast Valley. Homes for sale in Ahwatukee, Chandler, Gilbert, Mesa, Queen Creek and Tempe. Phoenix. Homes for sale in Anthem and Phoenix. Southwest Valley. Homes for sale in Avondale, Buckeye, Goodyear and Litchfield Park. Northeast Valley. Homes for sale in Carefree, Cave Creek, Fountain Hills, Paradise Valley, Rio Verde and Scottsdale. Northwest Valley. Homes for sale in Glendale AZ, Peoria AZ, Sun City AZ, Sun City Grand, Sun City West, Surprise and Youngtown. Wickenburg homes for sale. Metro Tucson Tucson area. Homes for sale in Marana, Oro Valley and Tucson. Green Valley area. Homes for sale in Green Valley and Sahaurita. Other Great Arizona Towns • Casa Grande homes for sale • Flagstaff homes for sale • Lake Havasu City homes for sale • Payson homes for sale • Prescott homes for sale • Showlow homes for sale • Yuma homes for sale