A new job, or perhaps a new love interest, is taking you to another city. You are now faced with a decision - should you lease or should you sell your home? There is no singular answer to this
Should I lease or should I sell?
A new job, or perhaps a new love interest, is taking you to another city. You are now faced with a decision - should you lease or should you sell your home? There is no singular answer to this question. There are advantages and disadvantages to both leasing and selling. Below are a few things to consider when making your decision.
The Pros of Leasing
Leasing can provide a good source of income. This can be a lucrative option, particularly if the rental market allows you to charge a substantially higher amount than your mortgage payment. In addition, if you lease your home you will have an asset as opposed to a liability. However, your home must be reclassified as an investment for it to be considered an asset. This reclassification can only take place after you have leased your home for at least one year.
In addition to the financial benefits of leasing, there are a few other benefits. In a season when it is hard to find buyers, it may be easier to find a renter. If there are improvements you want to make to your home before selling, renting may give you the time (and income) to make those improvements before you put the house on the market.
The Cons of Leasing
Simply put, leasing can create a lot of headaches. You are responsible for both the maintenance of the home and the management of the tenants. This responsibility can be hired out, but that might be a cost you are unwilling to pay. Your homeownership responsibilities do not disappear (and in fact may increase) when you are leasing.
In addition to homeowner headaches, you retain legal liability of the property. That means you can be found liable for things like dog bites, personal injuries, crimes and damage to personal propery. With proactivity you can lessen the risk of these incidents, but it is a possibility to consider.
Finally, by leasing you run the risk of having to cover the costs of your mortgage when you are unable to find tenants. You are on the hook for payments and your credit can suffer if you struggle to find renters.
Reasons to Sell
It's important to take a look at the market when deciding whether to lease or sell. Is it a good time to sell? If the market is healthy and you're able to sell your home at or above market value it may be wise to sell now. In addition, you will want to sell if you need the cash for your next home. If you are planning on purchasing a home in the near future, selling may be necessary. Remember, it takes a year of leasing for your home to be considered an investment. Consequently, it may be difficult to get a second mortgage on another home within that first year.
If you are ready to sell, or simply want to get a market analysis of what your home may sell for to help you make a decision, contact me today.
I have enjoyed a 30+ year career in real estate, participating in all aspects of the industry including residential, commercial, development, and investment properties. I am excited to have joined the....