Are you in the process of purchasing a new home and torn between renting or selling your existing one? Here are some key factors you should consider when deciding what to do with your prior property.

Check out my video for a deeper dive into the question of renting or selling your existing home!

Examples used in this video are for illustrative purposes only.

1. Customize Your Plan

The first and most crucial step in this decision-making process is to create a customized plan for your unique situation. It’s important to recognize that everyone’s financial circumstances are different. As such, what works for one person may not work for another.

2. Rental Comps

To begin, consider the potential rental income from your existing home. A real estate agent can run rental comparable properties just as they run sale comps. This step will give you a clear picture of how much you could earn by renting out your property.

3. Consider Monthly Cash Flow

One key factor to consider is how renting your old home will affect your new monthly mortgage payment. We will run you two scenarios comparing, selling with a larger down payment vs keeping with a smaller down payment, resulting in a higher monthly payment. We will see if the rental income derived covers this delta.

4. Home Appreciation

You should also factor in the expected home appreciation in your market. Even if your property doesn’t yield significant monthly cash flow, it may appreciate in value over time, allowing you to make more money when you eventually sell it. This is a long-term wealth-building strategy.

5. Diversify Your Investments

If your property doesn’t provide the desired cash flow, it doesn’t mean you can’t invest in real estate. You can sell your existing property, use the proceeds to buy your dream home, and invest in another property with less down payment. This diversifies your real estate investments and opens up opportunities in different locations or property types.

6. Maximize Interest on Cash

Consider what you can do with the funds from the sale of your property. Currently, some banks offer significantly lower interest rates than they should on savings accounts. With high-interest rates available elsewhere, you can earn more on your cash. For example, a 4.5-5% interest rate on a $100,000 deposit can earn you over $400 a month. This interest can help pay your mortgage or cover other expenses.

This example is for illustrative purposes only.

7. Evaluate Your Financial Picture

Ultimately, the goal is to build wealth in real estate and make your money work for you. Let us evaluate your entire financial picture and create a wealth-building strategy using real estate.

My Team and I are always available to answer any questions or assist in any way, so feel free to reach out!