Friday, April 19, 2024

Buying A New House? Should You Rent Out Your Old Home?

With the uncertainty surrounding Brexit looking over the property market, many people are wondering if they should sell, buy or wait.

There is a middle option that should also be considered. You should also be thinking about all three.

What that means is, instead of selling your old house when you are ready to buy a new one, you should rent it out. It’s a lot less complicated than it sounds and there are some good reasons to do it this way.

In this article, I will go over some of those reasons to give you some food for thought when you are in the market for a new home. 

Can you afford it?

Before you decide whether you should rent out your old house rather than sell, you have to calculate what your expenses are going to be.

Your biggest expense is going to be your mortgages. Use an online mortgage calculator to figure out what your new mortgage will be. Remember that you will be dealing with two mortgages if you still owe on your old home.

Your rent should cover your old home’s mortgage so you aren’t paying into two different ones. You should also have an inspection done on your old home to find any maintenance issues that will crop up. You’ll have to account for those and budget accordingly.

Weather a downturn in property prices

Property prices being low in your area is a boon for you when buying, but you also will get less for your house that you plan to sell.

If you rent instead, you can wait for prices to bounce back. You may plan to sell eventually, but this gives you a time buffer while you get the house ready. 

One issue is that you will want to sell your house quickly once you decide to put it on the market so you aren’t saddled with two mortgages.

Increase demand for rentals

There are some new laws for landlords which do make things a bit sticky. Yet, it is a great time to rent out your home. 

A recent increase in demand for rentals plus higher rents will practically guarantee that you have a steady cash flow from your old home. You may even cover your expenses beyond just the mortgage. 

Having a steady income from a rental may have you thinking about expanding and buying other properties just to rent once you have the hang of being a landlord.

Negatives about renting

Having your old house as an investment property doesn’t come without any disadvantages.

I mentioned how there are more regulations on landlords meaning it is more complicated than it used to be.

Another downside is that you may find the expenses are higher with tenant than if you lived there yourself. Some tenants treat the property poorly meaning higher maintenance costs.

Finding the right tenant may see you with an empty property while you wait. 

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