Has the home that was once perfect for you become less than ideal as you start or grow your family? Have you decided that the time has come to move up into a home more suited to your changing lifestyle? Is it time to leave your starter home and move up to your dream home? Moving up is exciting, but it also presents certain challenges you probably didn’t encounter when you bought your first home. When you already own one property, navigating buying and selling at the same time can be tricky. As you decide how best to proceed, you may consider keeping your current home and leveraging your investment as a rental property. Here are some tips to help you decide: should you sell or rent out your first home as you move up into your next home?
Move Up Strategies: Does It Make Sense To Rent It Out?
What are The Market Conditions?
If real estate market conditions favour sellers, it is likely that your home will sell quickly and at or above asking price. But when market conditions favour buyers, home values decline and listings can sit on the market for a very long time. This is ideal for you as a move up buyer, but it could work against you if you are trying to sell your current home. An experienced Realtor® can help you understand current and projected market conditions so you can decide if selling today is the right decision, or if you can optimize your investment by holding the property for at least a few years.
Is Rental Demand High?
Much like real estate market conditions, rental demand in your area will influence your decision to sell or rent out your current property. When there is a high demand for rental properties, inventory is low and rental prices can skyrocket. If your current home is located close to tourist attractions, you could also consider short-term rental for increased profits. This can be a great passive income strategy to pay off your mortgage and even contribute to the monthly costs of your new move up property.
Are You Ready To Be A Landlord?
Managing a rental property and tenants is no easy task. Advertising your property, showing it to hordes of potential renters, and screening for quality tenants takes time and money. As a landlord, you are also responsible for maintenance and repair costs on your property and you assume certain risks and liabilities. You could contract a third-party property management service, but this cuts into your rental income.
Is Your Home Appealing To Renters?
Before deciding that renting it out is appealing to you, you need to consider if your property is appealing to renters. The truth is that your home is attractive to someone (you bought it after all), but certain types of properties will have a broader pool of potential renters and impact your bottom line. For example, apartments and townhouses located close to the inner city will often rent quickly to students and younger office workers who cannot yet afford to buy, but this demographic is often in flux and turnover can be high. Large, suburban family homes may be suitable for a smaller rental pool but could attract renters who are likely to stay for a longer time and reduce the time and costs associated with turnover.
The Financials Make Sense
Your decision to sell or rent out your current home will likely come down to some serious number crunching. The biggest factor to consider is whether you can afford to carry the costs of two properties. If you are fortunate enough to have paid off your first home you are in a strong position, but property taxes, insurance, and maintenance costs are still required. If you need to take out a second mortgage to buy your move up and still retain ownership of your current home, do the math and make sure your rental income makes (dollars and) sense.
Sell Or Rent Out When You Are A Move Up Buyer?
If you are ready to move up into your next home or your dream home and want to explore your options for selling your current home or keeping it as a rental property, the best first step is to connect with a Realtor® knowledgeable in your local real estate and rental markets. They will have the insight you need to make an informed decision and the right Realtor® will help you navigate buying, selling, and even renting out your home with ease.
An experienced agent will be able to give you insight into current real estate market conditions, prepare a comparative analysis of homes that are currently for sale or that have recently sold, determine the most likely price at which your home could sell, and how quickly you can expect it to. Taking your goals for buying (move up) and selling or holding your property as a rental investment into consideration, a Realtor® can personalize a strategy to ease the process of buying while transitioning into rental income. If you need to sell your current home to find your next dream home, we can help with that too! Book a complimentary consultation with the team of Realtors® at the Tanya Eklund Group. By partnering with us to sell and buy your homes, you can leverage all of the information and insight we offer to make the best decision to protect your current investment and succeed with your next one. We are committed to transparency and client education and to selling your home for the most optimal price and terms. We are a strong partner to guide you through the complexities of selling and buying at the same time in Calgary and we have helped clients optimize their investments in the rental market too. To learn more about the benefits of working with a Calgary Realtor®, connect with our team by calling (403) 863-7434 or through our contact form. Let’s get your home sold together!