Don’t Sell Your Home, Rent It!
You’ve got some equity in your home and the itch to move up to something bigger, so it’s just a matter of time until your house goes on the market, right?
But are you sure that’s the best option? What if you could get that bigger, better house without getting rid of your existing house and make some passive income at the same time?
“When your current home no longer suits you, selling it is a popular option. But in some cases, turning it into a rental home might make more sense,” said House Logic.
Among the factors to consider:
- Your financial situation
- Local market conditions for rental homes
- Your future housing plans
- Your tolerance for being a landlord
- State and federal income taxes
- Current and projected home prices
Determining if your financial situation can support hanging onto your home is the first key step. You’ll want to talk to a financial professional to go over your savings, your credit, and your equity in your existing home. If you have the money for a down payment on the new home you want without using the equity in your home – great!
If you don’t need all the equity in your home for your down payment, you might be able to take out a home equity loan or refinance into an investor loan and use the loan proceeds as your down payment, and still make your home a rental,” said House Logic.
Of course, if you go this route, make sure the new house payment on the old house is still low enough that it can be covered by your renter, and then some.
Another advantage to renting instead of selling is that you may be able to get out of doing expensive renovations. Chances are renters won’t jump at the chance to live with crumbling floors, peeling walls, or moldy wet areas. But if you were considering expensive updates like a new kitchen to get your house ready to sell, you may be able to put them off and do only what is necessary to make the place clean and livable.”