Should You Keep Your Home as a Rental When You Upgrade?
As I work with people in our community to help them achieve their real estate goals, I often hear a recurring question: “We’re considering keeping our current house as a rental, but we also want to upsize into something bigger and better for our family.” This is a common scenario and one that comes with many considerations.
If you find yourself in a similar situation, here are some key questions to ask and factors to consider as you navigate this decision:
Do You Have What You Need for a Down Payment on Your Next Home?
First and foremost, it's very empowering to assess your financial situation with an expert–you may be in a much stronger position than you realize. Many home loans in our area are secured with relatively low down payments, typically ranging from 3% to 5%. This means that homeownership might be more attainable than you think, even if you're concerned about your savings.
If you’re contemplating pulling equity from your current home to fund the down payment on your next property, you’ll be pleased to know there are various loan products designed to facilitate this. This approach allows you to leverage the value you’ve built in your home without sacrificing your low interest rate. Many homeowners are hesitant to let go of favorable mortgage terms, but there are strategies that enable you to keep that advantageous rate while accessing the equity you need.
Exploring your options is an exciting opportunity, with a variety of products available to meet different financial situations and goals. There are many options to support your financial strategy. If you’re curious as to what might help you reach your goals faster, feel free to reach out to me. I’m here to connect you with trusted lenders and provide personalized guidance to suit your unique circumstances.
Do you want to be a landlord?
Being a landlord has its advantages and challenges. On the positive side, rental properties can provide a steady income and appreciate over time, contributing to wealth accumulation. Landlords benefit from tax deductions on mortgage interest, property taxes, and maintenance costs. They also have control over their property and rental strategy, allowing for diversification beyond stocks and bonds. As mortgages are paid down, landlords build equity, and consistent demand for rentals can offer stability during economic downturns.
However, there are significant downsides to consider. Ongoing expenses like maintenance and property management can add up quickly. Managing tenants can be challenging, with potential issues like late payments, property damage, or evictions. Market fluctuations can impact property values and rental demand, affecting income. Additionally, being a landlord can be time-consuming, requiring attention to tenant needs and legal compliance, which can vary by location. Periods of vacancy may also lead to lost income. Overall, while being a landlord can be rewarding, it demands careful consideration and effective management.
Conclusion
Deciding to keep your home as a rental while purchasing a larger property can be a savvy investment strategy, especially if you're in a strong rental market. However, it’s crucial to evaluate your financial situation and long-term goals to ensure that this path aligns with your aspirations.
If you're ready to explore your options or have any questions about the home buying or selling process, I'm here to help! Together, we can navigate your real estate journey and find the best solutions for you and your family.