Greenway Properties

Should I rent my home or sell it?

October 17, 2014

in Uncategorized

Should I rent my home or sell it?

 

Here is a great list of things to think about when deciding whether to rent or sell your current home. Many people are thinking of moving up right now to a larger home for the family or a home closer to work. With that decision comes another decision as to what to do with your current home. I am a huge fan of keeping your current home as a rental if you have the financial where with all to do it. I am in the business of selling houses right? If I am telling you to consider keeping yours, rather than having me sell yours and help you buy another one thereby helping you with two transactions rather than one, you should take a listen.

The bottom line is that real estate is typically the only kind of investing a family does and it is the easiest one to wrap your mind around and offers the best leverage in the investment process, meaning you can put as low as $10,500 down and own an asset worth $300,0000. The market is appreciating right now, it has been appreciated rapidly and that has started to slow down which is a GOOD THING for us. Continued years of 10+% appreciation will only take us back to the woes of the bubble bursting. Slowing to 4-5% appreciation which is where we are heading represents a stable market where people can safely watch their investments grow.

Here is how the math can work in your favor. If you are living in your 2 bedroom, 1 bath, 1,100 square foot starter house right now worth $280,000 and you sell it and by your 3 bedroom, 2 bath, 2,000 square foot family home on an acre for $350,000 you have one home appreciating at say 5% per year. That $350,000 house has earned you $17,500 in appreciation over the next year at 5%. However, if you kept your $280,000 home and rented it out to a nice young couple who covers your mortgage cost and went out to buy your $350,000 family home by next year you have seen 5% of $280,000 for $14,000 and 5% of that $350,000 home for the $17,500 giving you a total appreciation of $31,500 for the year while your renters pay off that home for you. Fast forward this out 18 years and your renters have paid off better than half of your little starter house that has been appreciating along for you and you have an asset that you can sell to finance an ivy league education for one of those little bundles of joy that got you out looking for the bigger house to begin with. This is the power of keeping your starter house. People build personal wealth over time by buying real estate not selling it. Once you buy a home, keep it and buy another when you can. Down the road you will have a nice nest egg.

Now it’s not all roses and Benjamins being a landlord. Read the article below which gives you great tips to consider before becoming a landlord.

Have any questions post them below, I am happy to help.

Article: Should I rent or sell my home?

 

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