Real estate markets are heating up and people are back to thinking of selling again. So, in a hot market should you rent or sell? Well, since you could only rent in a bad market, selling now in a hot one makes sense.
Let’s look at the first selling benefit of a hot market: inventory shortages. That doesn’t sound beneficial, but for a seller it’s a huge one. An inventory shortage means there are less homes on the market. Those that are on the market will get more interest and more bidders. Bidding wars means higher sales prices. So if you were underwater on your mortgage, meaning you owed more than your home was worth, even now you might be able to turn the tables. In order to figure it out, you should consult with a Realtor to find out what the actual value of your home is now.
Another consideration: being a landlord is a lot of work. Upkeep on a home when you live in it can be put off. All homeowners know that unless it’s a serious fix, small or nuisance things can be put off. If you have tenants, that’s not the case. And if you make upgrades to the property, you won’t get the same value back as you would if you upgraded to sell.
Next, you need to go and live somewhere too. Can you afford to buy another home without the proceeds from the sale of your home? Especially in this real estate market? You’ll need a down payment. Sure the rent may pay the mortgage on your current home, but what happens if your tenant leaves? What if it takes months to find another one? Can you afford to pay TWO mortgages? Renting your home may seem like a good idea, but it can get you into some serious financial trouble.
Think hard before renting out your home. It may not be the best idea in a hot real estate market.