Here are the questions that will help you decide whether to sell or rent.
The amount of time spent at home these days due to the pandemic has caused many people to rethink where they want to live. For many in the city, the possibility of moving to a more rural environment could be very appealing. If you’re making a move, should you sell your previous home or keep it as a rental? These are the questions you’ll need to ask yourself to ensure you’re making the right decision:
1. Can you afford to keep both homes? Do you need to take the cash from your home sale to buy a new one, or could you possibly use a home equity line of credit to pay for the second home’s down payment? Could you even qualify for a second mortgage? These are all questions you should discuss with your trusted Realtor and mortgage broker to find the best financial solution for you.
2. Are you the landlord type? If you’re not very handy or simply don’t have the time, you’ll probably need to hire a property manager. They will greatly reduce the time, energy, and liability you incur, but there’s a monetary cost to that. Check out the different property management companies in your area for their reputation and specific fees before you decide to hire one.
3. What’s the risk? Every investment has an element of risk and reward, and real estate is no different. Thoughtful research of the rental rates, vacancy rates, and property appreciation rates should be taken into consideration before you make this decision. Your Realtor should be able to provide all these numbers to you.
4. What’s the opportunity for wealth? Most people in the U.S. have gained great wealth through investing in real estate. These record-low interest rates may be your opportunity to leverage your current house into buying a second home. My wife and I have been through this process many times (owning 10 rental properties at one point) and have helped many clients through the process as well.
If you have questions about whether you should keep your home or turn it into a rental, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.