Join Club

Ask Adam: Tear Down or Rent Out?

Ask Adam header

This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.

Q. Our house in 22207 would be considered a teardown. We may move in a year or so when my husband retires. Our question is: would it be better to do some remodeling and then rent it out for a few years to benefit from possible future appreciation, or better to take advantage of the current developer demand and sell? Of course it will depend on specific details of the house, the neighborhood, and other family considerations, but do you have a general suggestion?

A. Cash in or let it ride… This is the classic question of gamblers and investment owners. In this case I’m inclined to advise you to cash in. Here are three reasons why:

  1. Alhough I have confidence in the direction of our real estate market, there is no guarantee that the current level of demand for tear down properties will continue. In the current market, you may be able to orchestrate a bidding war that will outperform what your property will return during more conservative times. Many builders are buying with their own cash and they have been burned by past markets. I imagine that the slightest hint of slowdown in the luxury market will directly affect the demand for teardown properties.
  2. You have mentioned remodeling the home before renting it out. This is going to require investment in the home that is not going to provide any value to the person or developer looking for a tear down. Your investment will become a sunk cost that eats into the additional profit you hope to gain by holding onto the property longer.
  3. You’ll want to carefully explore the tax implications of holding the property. For example, renting the property out for too long can create substantial costs in the form of your capital gains tax.

If you were my client, I would provide you with an estimated sales price and strategy for the current market. I would also do my best to project the appreciation or depreciation you may experience by holding onto the property. This exercise would help you make a decision based on the unique value and estimated performance of your home. You can compare these numbers to the estimated costs of holding on to the property as a rental.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.

Recent Stories

Good Monday evening, Arlington. Let’s take a look back at today’s stories and a look forward to tomorrow’s event calendar. 🕗 News recap The following articles were published earlier today…

An 18-year-old Arlington woman is facing a litany of charges after an reported bike theft led to violence. The incident happened Sunday evening near the intersection of S. Walter Reed…

What do I do if school doesn’t fit my kid? That’s the question that so many of the parents and families ask when they’re looking at small independent schools like…

There is a new play area for kids inside Ballston Quarter with plenty of pint-sized attractions. Located on the first floor of the mall, near the about-to-close Macy’s, Junior Playland…

Well-Paid Maids recently unveiled a new scheduling system.

That means it’s easier than ever to book your professional home cleaning with the only certified living-wage home cleaning service in the D.C. area.

Here’s what to expect when you book your cleaning:

  1. Select your location.

  2. Choose your service (i.e. 1 BD/1BA). (This is also where you’ll see the rate.)

  3. Pick your cleaner. (If you don’t have a preference, opt for “any available.”)

  4. Schedule a date and time. You can also set up recurring cleanings and get a discount!

  5. Enter your information and reserve.

Read More

Submit your own Announcement here.

Are you facing life’s challenges, feeling overwhelmed, or seeking personal growth? Embrace the path to emotional well-being with our expert psychotherapy services!

Why Choose Us?

Our team of compassionate and experienced psychotherapists is here to guide you on your journey to inner peace, self-discovery, and positive change. We provide a safe and supportive environment where you can explore your thoughts and feelings without judgment.

What We Offer:
✔️ Individual Therapy
✔️ Couples Counseling
✔️ Anxiety & Stress Management
✔️ Depression Treatment
✔️ Trauma Healing
✔️ Self-Esteem Building
✔️ Life Transitions Support
✔️ And Much More!

Read More

Submit your own Announcement here.

Portofino Italian Wine Dinner, April 6, 6:30pm

Four course Italian dinner, paired with 2 wines each. The wines will be served “blind” and notes on each wine will be discussed. The event is coordinated with Elite Wine Importers and The Portofino Restaurant. The dinner is on Saturday,

×

Subscribe to our mailing list