Sometimes it’s easy to miss the forest for the trees. Whether you’re new to real estate investment, or you’re successfully buying, selling and managing rental properties, there may be an opportunity that is flying under your radar.
Perhaps your family has grown, or you just want to move up to fancier digs. You are considering selling your current home and have begun the process of locating another in the area. When selling a personal residence, we must consider timing, and not just market timing. Do you wait until you have a contract in hand before signing on the dotted line for the new home? Or, perhaps you’ve located the perfect new home and are anxiously watching it and trying to get an offer in on the current home. You may even be considering a price reduction to get it moved before your chosen new home goes under contract.
There may be a perfect solution, and it can result in an excellent addition to your rental investment portfolio. Consider keeping the current home and renting it out. Think about the possible advantages and abilities this will provide.
- You have an intimate knowledge of the property, and you know it’s in great condition.
- A second mortgage or home equity loan can help fund the down payment for the new home.
- You can balance rent expectations with the amount of equity you remove to assure positive cash flow.
- The costs of selling, such as commissions and closing are no longer necessary.
Every situation is different. Whether this is a good strategy for you will depend on local market conditions, the amount of equity you have in your home, and how much you can realistically expect for rental income. However, it is certainly worth investigation if you’re in the moving mindset.
Loading ...
April 10th, 2008 at 11:42 am
It’s a sign! I just rented my condo to move in with my fiance after we get married. She has a 3BR/2BA house and our combined income could put us in a bigger house with more amenities. I was just telling her last night that renting my condo was so easy we should just rent out her house too and then go and buy a third property. Everyone thinks I’m nuts! You own how many houses?!? Plus I have about $100K in a stupid HELOC that Bank Of America gave me that we could use as a down payment (read: they gave me quite a bit more equity than they should have). So, anyways wish us luck in renting out our 2nd home. Thanks!
Parker,
Make your dreams a reality. Dean Graziosi
Best of luck to you and your soon to be wife
April 22nd, 2008 at 5:26 am
Even farmers will tell you not to put all of your eggs in one basket. The idea of diversifying is key in any investment, because a broader range of investments reduces the overall risk of investing.There is no trick or magical method to conjuring up the perfect diverse portfolio that will guarantee financial success. However, an investment portfolio that is well diversified is more likely to bring investors success than one that is not. Houses, condominiums, properties, land - they can all be valuable investments. Unlike cash, real estate tends to yield returns in the long term. Having at least a small percentage of your investments in real estate creates asset diversity for your portfolio.A real estate investment can make a nice addition to your investment portfolio. It adds diversity, and provides a relatively solid investment that is likely to grow. And, with help from a REIT, you do not have to own property to become a real estate investor.I have discussed about the real estate sector in depth in my blog- www.realtydigest.blogspot.com