When buying a new house, most people just sell the house they have and then buy. The thing is, it shouldn't be so automatic that you should sell your old house. There are plenty of good reasons to get it out instead of just selling it. In fact, there are more reasons to rent it out than to sell it, so it might make less sense to sell it.
Renting a home is not for everyone, but when you are on the fence you need to know what you are getting yourself into. In this article, we're going to cover some of the factors that you need to consider before selling or renting your home.
Management company vs. being a landlord
There are two ways to rent out your old home. You can be a landlord and essentially be on call for your tenants, or you can hire someone to manage the property for you. Each has advantages and disadvantages, and which path to take depends on your circumstances. For example, if you are shopping on some home and land packages in Newcastle or the like where you are not far from your old home, you can be a landlord if you don't mind the work. If you live far away from the property, it makes sense to rent it out and let someone else take care of it.
Another factor is the average rent for that area. If you hire a management company to do the job, it means a higher price on the rent. Can the area get as much rent as it takes to make a profit? Is your property nice enough or big enough to warrant a higher rental price? These are the questions you need to ask before hiring a company. If you feel like you're not good at fixing things, you might not be a good landlord either, and it costs money to have to pay people to do some of the odd jobs.
Is it worth selling?
So far, the real estate market has shown that it is still quite robust, which benefits sellers. However, this does not automatically mean that you should sell. Think about how much you owe your home, how much it is gaining in value, and how much the rents are for similar properties in your area. If you are able to cover the mortgage on the property from the rent, it is worth renting and keeping rather than selling it. If the trend looks like values will continue to rise, you can have a free property soar and then sell it when you think the market has peaked. This can be tens of thousands of dollars difference. This is when a home becomes an investment and asset rather than an expense.
