You’re Upgrading! Hold on to Your Current Property?

When you’re ready to upgrade, after settling on a new home the first question is: do you keep your current property?
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Your first home can hold special memories. When you’re ready to upgrade, after settling on a new home the first question is: do you keep your current property? Should you rent it out, hoping it will continue to appreciate in value, or would it be better to sell it? What’s the best course of action?

Decide to sell and you can you can use the money for something you want. For instance, you can put the money toward your new home or set aside for your kids’ college fund.

If you decide to sell, the next question you’ll answer involves how. Should you list with a Realtor® or work with a real estate investor? If you find yourself in this situation be sure to think things through before making a decision.

Can you Afford Two Mortgages?

Is your current mortgage is already paid? Good—you have a little leverage. However, if you’re still paying off your first mortgage, you’ll need to calculate whether your income will allow you to take on a second.

There are no guarantees for how quickly you can get someone in and paying rent. Can you wait? The answer to this question is key to deciding whether you should hold on to your home or sell.

Getting a loan isn’t as easy as it used to be. Lenders typically like to see at least two years’ worth of managing rental properties for them to allow you to use future rental income as part of your income calculations. However, if you’ve rented homes before, the pendulum swings in your favor.

What are Rents Like in Your Neighborhood?

Not all neighborhoods are created equal, and what you’d like to charge in renting out your home and what you can actually make will depend on a variety of factors. Knowing what the rents are like in your neighborhood can give you a good idea on what you could potentially earn from holding on to and renting your home.

What is the Market Like?

Just like everything else, what you stand to make by keeping your old home depends on supply and demand. If you live in an up-and-coming neighborhood, where houses are whisked off the market before the sign goes up, then you’re likely to find tenants pretty easily. On the other hand, if homes in your neighborhood tend to sit on the market awhile, or if your neighborhood is far from amenities, you may find yourself paying two mortgages longer than you’d like.

There are no guarantees for how quickly you can get someone in and paying rent. Can you wait? The answer to this question is key to deciding whether you should hold on to your home or sell.

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