Moving into a new home doesn’t always mean you have to sell your old one. For some Cary homeowners, keeping their current property as a rental can provide an additional source of income and a chance to build long-term wealth. Others may find that selling makes more financial sense, especially if they need the equity to purchase their next home.
Both options have advantages, but the right choice depends on your finances, the condition of your home, and how much responsibility you’re willing to take on.
Consider How Much Equity You Have
One of the first things to evaluate is how much equity you’ve built in your home. If property values have increased since you purchased it, selling could leave you with a substantial amount of money to put toward your next purchase.
That equity could help cover a larger down payment, reduce your new mortgage payment, or eliminate other debt.
On the other hand, if you have a low mortgage interest rate, keeping the property may be appealing. You could potentially earn rental income while continuing to pay down your existing loan.
Before making a decision, compare your estimated proceeds from a sale with the potential financial benefits of holding onto the property.
Calculate the True Cost of Renting Out Your Home
It’s tempting to compare your monthly mortgage payment with what a tenant might pay in rent. However, being a landlord involves expenses that can quickly reduce your profits.
In addition to your mortgage, you’ll need to account for property taxes, insurance, maintenance, repairs, and periods when the home sits vacant. You may also want to hire a property management company, particularly if you don’t have the time or interest to handle tenant requests yourself.
Rental income isn’t guaranteed, either. Unexpected repairs or a tenant who stops paying rent can create financial strain.
Take a realistic look at your monthly expenses and potential rental income before deciding whether keeping the home makes sense.
Think About Your Long-Term Plans
Your future goals should also influence your decision. If you expect to return to Cary or want to build a portfolio of investment properties, keeping your home could be worthwhile.
However, if you’re relocating permanently or want to simplify your finances, selling may be the better fit.
Consider your tolerance for risk and responsibility, too. Owning rental property means dealing with maintenance issues, tenant turnover, and the occasional emergency. Even with a property manager, you’ll remain financially responsible for the home.
There are also tax considerations. Selling a primary residence may qualify you for a capital gains tax exclusion, while converting it to a rental can affect your eligibility depending on how long you keep it. A tax professional can help you understand the implications.
Get a Clear Picture of Your Home’s Value
You don’t have to make this decision without knowing your options. Understanding what your Cary home could sell for today is an important starting point, even if you’re leaning toward renting it out.
***
Thinking about selling your home or keeping it as an investment? Contact Nina Gervase at Cary Area Real Estate for a personalized look at your home’s current market value and guidance on your next move.
