Should I buy or rent? | Monday Minute November 9, 2020

Here’s the situation. You are buying your next home. But, you are in a position where you don’t NEED to sell your current home to afford the next.The next question I get, is should I sell or rent out your current home?The idea of holding onto your current home and using it for passive income sounds like a no brainer right? Here are some things to consider when deciding whether to sell or rent it out:So what should I be considering if I wanted to rent vs sell?You need to consider cash flow and income. Most investors I work with are looking for an 8-10%+ return on their money. So it's important to consider how much money you have into the home. If after paying the mortgage, management fees, and any miscellaneous repairs, and you make $7,000 a year and your cash in the home was $70,000, you are looking at a 10% annual cash yield.Second, consider the current market. If it is a buyer’s market and there’s a lot of inventory available, housing prices can be lower. If you’d like to wait for your home value to appreciate before selling, renting it out is something to consider.Third, consider the equity in your home. If you don’t have much equity in your home - from the current market or other situations - it might be worth considering renting if selling means coming out of pocket with settlement expenses that won’t be covered by profits from the sale.Here are some points to think about if considering selling.After crunching the numbers and it looks like what you’d rent it for will not cover its cost or lead to any positive cash flow, it might be better to sell the home.Second, consider the market. If the market is hot, like it is right now, and you are able to sell your home for top dollar, it likely makes more sense to sell.Third, consider if you want to be a landlord. If a home is lived in, there will be repairs needed. It’s a part of life. If you do not want to deal with repairs in a home that you aren’t living in yourself, consider selling.If you are looking to move and do not require a home sale contingency to finance your next purchase and are considering keeping your property as an investment, reach out and we can help you determine what makes the most sense for you!