It can be a stressful experience to move out of the state. The move might be initiated because of a job or changing lifestyle. You might want to experience a new lifestyle in a new location. It is all fine until you realize you have to deal with a property. You are the owner of a beautiful home, and you cannot let the property sit as-is while you are away.
As the homeowner, you must do something about the property. The options are limited. You can rent the home or sell it. There are pros and cons of both choices.
If you are moving because of a job change or other financial reasons, then it is unlikely that you will return quickly. You will settle into the new place, and you might not return before several years. In that case, you must think seriously about the house.
What is the current value of your house? How much is the mortgage amount? What is the property value appreciation rate? Will you make a profit if you sell your house now? Does it make sense to wait for a few years before you sell the home?
Read the mortgage documents. Understand the contract and read if the mortgage document contains an early payment penalty.
There are good reasons to delay the sale of your house. However, understand that becoming a landlord is not for everyone. It is tough to manage your property and tenants when you are away. Since you are moving out of state, you will end up working with a property management company which will take care of your house and related financial matters.
Property management firms charge you 6%-10% of your monthly rent. When you consider all the expenses, it might not be a financially wise step to rent your property. New landlords often make the mistake of miscalculating the cash flow. Do a careful analysis and then decide whether leasing is a viable option.
When you become a landlord, your monthly expenses increase as now you must pay a higher insurance premium, and you are responsible for ongoing repairs. You must also comply with tenant laws and ensure that your home is safe for living in. It also pays to have a liability insurance plan that can protect you in case legal issues arise while tenants are living in your home.
Benefits include the peace of mind and quick access to cash. You do not have to worry about managing a house. Selling the home allows you to buy a new property in your new town. You can consider buying a new home before you have sold the old one. However, we do not recommend this option.
An existing mortgage on the house will prevent you from getting approved for another loan. You might not be able to put together a down payment of 20% because that is what you will need for a secondary loan. Apart from lending requirements, you will be responsible for paying two mortgage installments simultaneously which can be challenging for any homeowner.
The downside of selling is that your home might not sell at the highest possible price. Maybe, you must move in a limited time-frame, and you do not have the time to prepare your home for sale. The market might not favor selling which can result in a lower price.
Will you return in next 6-12 months? If not, then you should sell your house. A vacant and abandoned house can lose its market value. Unless you are working with a reliable property management firm, there is no guarantee that tenants will keep your home in a great condition. Furthermore, there will be months when your house will be vacant and will not generate any money. For most people, being a landlord is a hassle, and they do not want to experience that trouble, and it is in their best interest to sell the house.
If you do not know where to start, contact us. We will guide you in the right direction.
If renting is the best option for you, we can refer you to a reliable property management firm in Dupage County.
Moreover, if you are looking to sell your house, we can buy your home. We understand that you have to move out in a narrow time-frame. Thus we will purchase your home as-is for a cash price. You do not have to repair the house. We do not even ask you to paint it.
You also do not have to pay any realtor commission. We will pay all the closing costs.