Should I keep my home or sell it?
NGG Mortgage
NGG Mortgage CA
Published on January 9, 2019

Should I keep my home or sell it?

If you already own some a home and are looking to move into a new one you may be asking yourself, if it’s better to sell it or rent it out?

The answer to this question will depend on your circumstances, the housing market, financial situation and many other factors.

What can’t be ignored is that there is a common thread amongst those that have accumulated long term wealth – the acquisition and holding of Real Estate.

Living in the home initially and then eventually renting it out.

The most common first home purchase is to ‘owner occupy’ and live in the home. As circumstances change or the family grows many homeowners need to determine if they’re ready to keep the current home as an ‘investment’ property or simply move on from it.

Historically, the purchasing of a home, living in it for some time, and ultimately renting it has been a successful strategy to build a portfolio of real estate.

From a financing perspective this can be a great strategy because you have the opportunity to the best available programs and rates. When initially buying and occupying a home, the programs for owner occupied loans will have the more flexible guidelines, lowest down payments and rates. Years down the road when moving out of the home those terms remain attached to the loan instead of requiring a change to investor financing rates which are higher.

The biggest challenge for many to make this happen is down payment. If the equity in the departing residence is necessary as a down payment on the new home then this option won’t be possible. Nevertheless it is always ideal to hold and buy if able.

Many homeowners have reservations about being a landlord and dealing with the risks associated with renting property. For those that aren’t comfortable managing a home it is recommended to employ a property management company which will have a cost but ultimately removes the pressures generally associated with doing it yourself.

The way to win is to hold.

Through the years clients have asked, what is the magic formula to win when selling and buying a new home at the same time?

In a declining market of home values a seller is likely to feel like they’ve ‘lost’ when selling their home while getting a great deal on their new home. Meanwhile in an inclining market the seller feels like they’ve hit a home run selling their home but the houses they’re buying are overpriced.

My point is that the same market conditions apply evenly on both sides so you can’t win on one without losing on the other. The only strategy that beats the market is to buy and hold while choosing to only buy again when values are optimal and never selling when the value is down. The key is to always plan for a long term hold where rental income is completing the payment and payoff of the initial mortgage.

NGG Mortgage
NGG Mortgage CA
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