You buy a house, and you are planning to stay in that place for good. You are very comfortable and happy with the things happening in your new home. Time passes by. Everything is still the same, and most of all, you don’t have any problem with your neighbors and the community that surrounds you.
But one day, something came out since you have a comfortable life in your home. It reflects on your job by being a more productive employee. And your manager tells you that you got a promotion. Still, this promotion requires you to move to another place somewhere that is very far from your home.
Promotion is also one of your goals, and you are happy with that achievement. And willing to take the risk of moving out to another place. Nevertheless, one thing pops out in your mind, and this is about your home. One question bothers you Should you sell or rent out your home?
It is an agonizing question that would stick in your mind. You want to develop a win-win decision that won’t result in a not-so-good outcome.
Below are listed the things to consider if you should sell or rent out your home?
COSTS / EXPENSES
To Sell or rent out your home will bring upon costs or expenses. One of the significant factors to consider is whether the income for the rental property is sufficient to cover the mortgage and the maintenance. Fees or cost is always in line with owning and managing a rental property. On the other hand, you also want it to be a potential profit-making venture.
To calculate the amount of rental income that you anticipate earning, you should observe comparable properties on how they charge and balance the expenses of owning and maintaining the property, such as a mortgage, repairs and maintenance, taxes, and fees for a property management company.
While selling your home, you will spend on home improvements to make your home appealing to the buyers, real estate commission, typically 6 percent of the sale price, utilities, loan pay off, and closing fees.
TEMPORARY MOVE OR PERMANENT
If you plan to move temporarily and return to your city, you may rent out your home. Renting out will give you a sense of security that you still have a place to stay or live whenever you return to your city. And it will be more practical rather than purchasing a new home when you return.
But if you plan to leave permanently, selling would be a better option for you. And it can be a good idea to access your equity and get a new home in a new place.
NEED TO ACQUIRE HOME EQUITY
If you depend on acquiring equity, are currently bound in your home, and plan to use that to buy a new home, the option to sell will best fit the situation. Eventually, the money you will acquire from selling your home will be used for a downpayment or moving out expenses.
BUYING A NEW HOME WHILE RENTING OUT THE OTHER
If you decide to rent out your home and plan to buy a new one with a mortgage, remember that it will be a plus point for you when you have a rental income because some lenders consider it one of your financial sources. Some lenders will only count rental income, usually up to 75 percent, as a source of income.
FIND OUT YOUR HOME VALUE
It would help if you considered the value of your home. But how can you determine the value of your home? Some real estate sites give their estimates but are often inaccurate. It is also not considered helpful if you note some of the listings of prices of homes for sale in your neighborhood. The information you need is from the up-to-date sold properties, and that information is available at the real estate market sites such as Zillow, Trulia, and other real estate market sites. Obtaining a current market analysis would also help to determine your home value.
Supposing you get the full asking price of the home, you should consider if the total amount due to you will be positive or negative? If it is negative, you need to complete the balance at the end, and it would not be appealing to sell. On the other hand, if it is positive, you can use the money left to achieve your next goal, like a downpayment for a new house or paying off your debt.
PAYING CAPITAL GAINS TAX
If the home that you would like to sell is your primary residence for at least two out of the five years, you will be able to exclude up to $250,000 or ( $500,000 if filers were married ) of capital gains from selling. If you meet the eligibility requirement for the sale of your home of the Internal Revenue Service, you can sell your home tax-free.
UPSIDE DOWN MORTGAGE
If your loan balance is higher than your home’s present value, you may not be able to manage to sell your home. You do not have sufficient equity to sell the home except that you are amenable and capable of paying the cost in cash. Under those circumstances, converting your home into a rental property may bring forth the chance to acquire more equity before deciding to sell it on the upcoming date.
BECOMING A LANDLORD
If you cannot sell your house for some reason, make yourself ready to become a landlord. Rental property management can be demanding and tedious. Can you consider yourself handling repairs? If not, you must know how to Choose and Hire Contractors to repair and maintain the rental property. It would be best if you also took the responsibility as a landlord to Screen, a Tenant, and one of the significant issues is Dealing with Non-paying Tenants. You can hire a property management company like Pro Realty to take care of all the duties and responsibilities of managing a rental property.
By selling your home, you will be able to have cash in your pocket, and you can buy a new property if you are going to relocate permanently. And you are hassle-free about handling and managing your property.
But on the other hand, renting out your home can be a means of another income. It can be a temporary solution or a continuing investment. It can bring you a lucrative income after the mortgage has been paid off.
Determine whether to sell or rent out a home will depend on your finances and your way of living. As a guide for decision-making, you must consider your financial condition. Or you will leave permanently or somehow return to your current place, prepare to become a landlord, or hire Pro Realty, and we can take care of your property hassle-free.
