When you buy a new home, most people just sell the home they have and then buy. The thing is, it shouldn’t be so automatic that you should sell your old home. There are a lot of good reasons to recent it out instead of just selling it. In fact, there are more reasons to rent it out than to sell it so it actually may make less sense to sell.
Renting out a house isn’t for everybody but if you are on the fence about it then you will need to know what you are getting into. In this article, we will go over several of the factors that you need to consider before you sell your home or rent it out.
Management company vs being a landlord
There are two ways to go about renting out your old home. You can be a landlord and essentially be on call for your tenants, or you can hire somebody to manage the property for you. There are pros and cons to each and it does depend on your circumstances as to which route to go. For instance, if you are buying from some of the house and land packages Newcastle or something similar where you are not far from where your old home was then you could be a landlord if you don’t mind the work. If you live far away from the property then it makes sense to hire out and let somebody else take care of it.
Another factor is the average rent for that area. If you hire a management company to do the work, then this will mean a higher asking price for rent. Can the area get as high a rent as you need to make a profit? Is your property nice enough or big enough to warrant a higher rental price? Those are the questions you have to ask before hiring a company. If you feel like you are not good at fixing things then you also may not make for a good landlord and it will cost money to have to pay people to do some of the odd jobs.
Is it worth it to sell?
So far the housing market has shown that it is still quite robust and this favors sellers. However, this doesn’t automatically mean you should sell. Think of how much you owe on your house, how much it is gaining in value, and how much rents for similar properties are in your area. If you are able to cover the mortgage on the property from the rent, then it pays to rent it out and keep it rather than sell. If the trend looks like values will continue to rise then you can have a cost-free property gaining in value and then sell it when you feel the market has hit its peak. This can be the difference of tens of thousands of dollars. This is when a house becomes an investment and an asset instead of being an expense.