Sell, Rent Out Or Re-Invest?

Choosing between selling, renting out and re-investing

If you are thinking of moving out of your present home, you could choose to sell it and use the money for the down payment towards the purchase of a new home, or you could choose to rent out your property instead of selling it, or you could choose to sell it and then use the money for purchasing an investment property.

The first route is that of selling your home and using the money towards the down payment for purchasing your new home. One of the main advantages of such a move is that it could end up lowering your debt as using this money for the down payment could lead to lower mortgage payments and lesser interest. The downside is that you are not receiving any cash flow from the money received from selling off your old home.

The second route is that of renting out your current primary home. The advantage of this route is that of using your old primary home to generate cash flow. Also, if you feel that property values will increase significantly in a certain number of years, you could choose to hold on to your current primary home and sell it off when its value reaches the expected number, while renting it out in the interim period.

The downside of this route is that you might have difficulty with the down payment for purchasing your new primary home. The lesser the down payment, the more you may have to shell out in terms of interest, making it a more expensive loan. If you had chosen to sell off the house, you could have used the money received from the sale to make a larger down payment, thus lessening the weight of debt.

Also, it costs money to maintain a rental property. Taking care of a rental property and its tenants is not really an easy job and will require time and effort from your side. You should also consider the possibility of property values not appreciating to the levels that you had expected. Take this into account before choosing to rent out your current home instead of selling it.

If you feel that you would get better returns from a rental property in a different location, you could choose to sell off your current primary home and re-invest the money in an investment property. This route could be beneficial if you feel that the expected yield from an investment property bought using the money received from selling off your current primary home would be significantly greater than the yield from your current primary home if you had converted it into a rental property. The downside is that you may have to face debt on a new primary home as well as a new investment property.

Syazrin Property advises property-owners to choose between selling, renting out and re-investing only after talking with the experts. Consulting with professionals like real estate agents can help you choose the route that is most ideal for your financial situation and long-term plans.