Are you planning a move and unsure of whether to sell or rent your current home? We often find our clients running into this dilemma. There is no definite answer as everyone's situation is different. It depends on your financial situation, risk tolerance, rental market conditions and more. Here are a few things to consider:
1. INCOME VS EXPENSES
In most cases, your new Tenant will flip the bill for all of the utilities so you can easily calculate what your expenses are by adding your fixed expenses. Here are a few examples:
- Mortgage payment
- Property taxes
- Condo fee
- Rental equipment (ie. water tank, a/c, furnace, etc)
Add up those expenses and then subtract the monthly rent to see how you fair. Being cash flow POSITIVE is ideal. This means you have excess funds every month, however many people proceed even if they're still out of pocket on a monthly basis as the appreciation may far outweigh their out-of-pocket expense.
2. LENDER REQUIREMENTS
If you plan on keeping your primary residence for the purposes of renting, and therefore making it an investment property while you find a new primary residence, your mortgage provider may have requirements affecting your current mortgage or the next property you purchase -- check with them to see if there's something to be aware of.
How will your finances fair if your Tenant's cheque bounces or they leave and you are unable to find a new Tenant for one, two or even three months? Make sure you're prepared to carry both mortgages in a worst-case-scenario.
4. PROCEEDS FROM SALE
If you sell, instead of renting, how much will you collect from the sale of the home and could that money be better spent elsewhere? Could those funds make the difference between getting your dream home and living in the perfect neighbourhood? Is there another investment opportunity that you'd like to take advantage of?
There are unquestionably countless variables to consider and unique situations for everyone. If you're considering one of these options and would like help deciding shoot us a text or call us at (416) 707-8401 or email email@example.com
Ariel & Adrian
The Kormendy Trott Team