Should I Sell My Home, Or Just Rent It Out?
The pros and cons of holding onto your current property while you purchase another.
We’ve spoken in the past about using property as a means of building wealth through equity and monthly cash flow from rental income. While this is a great opportunity as an investment in your future, there are some things to think about if you’re considering holding onto your current home while purchasing another one as your residence of choice.
1. Money To Move
You own a home. You want to keep it to rent out as you move to a new home…simple enough. But do you have the means to qualify for another mortgage? Without cash from the sale of your current home, you’ll need to consider your funding options.
2. But I’m renting my current home, so I won’t have two house payments. What’s the problem?
If you plan on holding onto your current home as a rental, you’ll need to show that you actually have a rental agreement in place, with deposits and signatures at the ready to show your lender that the mortgage, taxes and insurance are covered. Even better if you can show positive cash flow from your monthly income.
Even with this, some lenders will only take into account a certain percentage of this income in the qualification process, which may result in a requirement of a higher down payment on your part, or you may be qualified at a slightly higher rate.
3. Do you have what it takes to be a property manager?
Qualifying renters, handling maintenance and other issues, and most importantly, understanding the legal issues and rights of both landlord and tenant are paramount as a successful property manager. If you’re going to contract those services out, you’ll need to figure this into your monthly management expenses.
Which is better for you? Rent your home out, or sell?
Considering the above information, are you ready to become a property manager? Or is it time to consider selling your home in order to purchase your next? Either way, The Elgin and Pilar Walker Team have nearly 30 years experience in helping home buyers, sellers, and investors realize their real estate goals. We’re here to answer all of your questions at no obligation.
Elgin & Pilar Walker
Keller Williams VIP Properties
25124 Springfield Court Suite 100
Valencia CA 91355
Office: (661) 290-3781
Mobile: (661) 347-6248