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Property owners holding more than one residence might fret over the conundrum whether to rent the extra property or sell it. After all, there is money to be made in both alternatives and each has its pros and cons. Some property owners seek to sell an extra property simply to unload it. Other property owners like the idea of collecting rent, allowing the additional property to “pay for itself”.

Real Estate Investment Strategies:

There are two principle real estate investment strategies: buy, refurbish and sell–known as “flipping” or buy, refurbish and rent. The former is rightly considered to be the fastest way to turn a profit. But an investment property that does not sell straight-away eats into the profits.

On the other hand, purchasing an investment rental brings in a positive weekly or monthly cash-flow. However, rental owners must be prepared to foot the “carry costs” associated with an empty, un-rented property for at least two months of the year. In addition, rental property owners must be able to hold enough cash in reserve to pay for emergency repairs.

Each strategy has its risks and rewards. The question of which strategy is correct depends on the personality of the investor and current real estate market circumstances.

Pros of Selling an Investment Property:

* Ability to make a profit in a short period of time.

* No “legacy” or “carry” costs. These include taxes, insurance, mortgage, emergency repairs and maintenance.

* New capital to purchase another real estate property to flip.

As mentioned, there are pros and cons to each investment strategy. While selling an investment property seems to be the best and quickest way to turn a profit, a market downturn, rising interest rate and other factors can quickly erase any potential gains.

Cons of Selling an Investment Property:

* Having to pay a real estate broker’s fees.

* Qualifying for a new mortgage.

* Paying closing costs.

* Slow sale’s market.

Pros of Renting an Investment Property:

* Having the dwelling occupied to discourage possible vandalism.

* Positive cash flow from rent on a weekly or monthly basis

* Growing equity while renting.

* Mortgage amortization.

While there are cons to renting, most are financially insignificant. These expenses are generally covered by gains made from continuously renting the property. Although renting means taking on a landlord status, it likewise means being in control of the property. Unlike selling a property, when an owner’s investment is left to the competence of a real estate broker.

There are other advantages to renting over selling. Owning a rental property means tax breaks. Any repairs made to the property can be deducted. Moreover, a rental owner does not have to make repairs himself. A rental property owner can hire a property manager to do the actual work. In addition, rental owner can also deduct depreciative items in the property. These include any appliances that loose value over their lifetime.

Yet another consideration about renting versus selling is the profit realized after the sale. If an investor rents, money comes in on a regular basis. But if an investor sells the property, he must pay taxes on the profits in a lump-sum.

What’s more, rentals properties should bring in 125 percent of the mortgage payment. That figure is a good deal of thumb for any rental real estate investor.

Dane Cross is a UK based freelance writer currently writing on behalf of One UK, providers of flats and apartments to rent in Leeds.