When you’re moving, you’ll probably be working on the assumption that you’ll sell the old one. That’s the way that people usually do it. But have you considered not doing that? If you keep the old property you can generate income by renting it out. Or you can do some work on it and sell it for more in the future. If you can afford a second mortgage without having to sell the first house, it’s worth thinking about. However, it isn’t always the best thing and it depends on your situation. These are some questions to ask that will help you decide if you should sell or rent the old house.
Moving: Should You Sell Or Rent The Old House
How Much Can You Rent It For?
This is the first thing to consider is how much you can receive in rent. Because if you aren’t going to get that much in rent, it might not be worth the hassle of finding tenants and maintaining the property. The easiest way to get a rough estimate of what you might get is to consult a property management company like the ones at https://renterspad.com/pricing. They’ll be able to tell you how much you’re likely to get in rent. And they’ll also be able to help you with the process of finding tenants. If your house isn’t in a particularly desirable area, you might be better off just selling it because you’ll struggle to find tenants willing to pay you a decent amount of rent.
Can You Afford A Second Mortgage?
This is another important factor and most of the time it depends on the new place. You’ve got to keep in mind that renting the old house out will cover the mortgage on it, plus a little extra. If your new mortgage isn’t too expensive, you should be able to cover both. If you’re downsizing, you’ll be able to afford it pretty easily. However, if you’re moving into a bigger place, you might struggle to cover the mortgages on both, even with the extra income from the rent. You’ve also got to consider the repairs etc. that you’ll have to make on the property as well. These can sometimes get pretty expensive if the damage is particularly bad.
Are You Allowed To Rent It Out?
You probably weren’t thinking about the possibility of renting out your property when you first bought it. It isn’t likely that you checked the small print of the mortgage contract for any rules about renting. In some cases, the mortgage agreement might forbid you from renting the place out. Others might have a time limit, usually a year, so you can only rent it for that long. If you do have a time limit, it’s not worth renting it out because you’ll struggle to find a tenant that is willing to sign a contract knowing that they can only stay for a year. The only exception to this is probably students. So if you live in a university town you could rent it for a year and then sell it. Renting to students is a bit different to other tenants so check out this handy guide at http://www.studentlandlord.com/landlord-guide. It’ll tell you everything you need to know.
Renting is often the best thing to do because it’ll give you more income. You can hold onto the property which is likely to increase in value eventually. However, you should sell up if you don’t think you’ll be able to afford 2 mortgages. Either way, weigh your options. Compare the income to the expenses. Make sure the income is much higher. Take your time and make a smart decision. Once you commit to sell or rent it is permanent.
Do you have any suggestions or ideas to help make the choice to sell or rent the old house for our readers? Please add them to the comment box below.