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There are plenty of reasons why you might consider selling your home in the current market, especially as you watch your neighbours and friends fetching top dollar for their once modestly priced properties. Whether it’s because you need to relocate, you require something more from your current living space or just stumbled upon your literal dream home for sale, there are plenty of reasons why you may be thinking about selling your home. Before you jump right into the next steps to sell, don’t overlook the opportunity to rent it out. While there’s plenty of incentive to sell in Canada’s hot housing market, there’s also an equally hot rental market you shouldn’t overlook as you decide to leave your current home behind.
Signals You Should Sell
If you’re unsure which way to go when it comes to leaving your current home, you’ll want to keep an eye out for these telltale signs that you should sell:
In a seller’s market, the demand for homes outpaces the supply available to potential buyers. This means that the cards will be in your favour, so you’ll have the opportunity to be fussy with the offers you accept and what you require from potential buyers to seal the deal. Choosing to sell your property in a seller’s market most likely means you’ll wind up walking away with more profit than if it were a buyer’s market. It could also mean you’ll make much more profit up front than you would renting out your property over the course of time, and you won’t miss out on the immediate cash of a home sale in a lucrative seller’s market.
You Cannot Charge Enough For Rent
Renting can change your home from a financial liability to a profitable asset, but only if you can charge enough money. In a perfect world, you’ll want to make sure the rent you can charge will cover your mortgage, taxes, insurance and any maintenance costs. If you live in an expensive home within a high-value neighbourhood, it’s unlikely you’ll be able to charge enough to offset your costs to hang onto it as a rental. If you’re unsure at a quick glance, take the time to do these calculations, and it’s likely that your findings will help you decide immediately whether to sell or consider renting.
You’re Not Prepared To Maintain A Rental Property
Becoming a landlord by renting out your home means that you’ll have a new set of responsibilities that may not jive well with your current lifestyle. As the owner of a rental unit, you would need to always keep cash on hand to keep the property maintained, cover any unexpected costs, or stay afloat when the property isn’t being rented. You can be held liable for tenant or visitor injuries, so it’s critical to have adequate insurance, such as landlord liability insurance and landlord property insurance. If keeping up to date with building codes/laws, finding and retaining good quality tenants and taking care of property management seems a bit daunting, it could be a sign that you aren’t ready to take on the extra responsibilities of becoming a landlord.
Signals You Should Rent
If you can afford to keep your home and rent it out while you buy another, you should absolutely consider this option before you list your property for sale. While this doesn’t mean that renting out your old home is the best fit, it does mean that you should take the possibility seriously if you notice any of these signs:
Local Rental Demand Is High
Rental demand can spike in many different areas for a variety of reasons. If you’re located near a post-secondary institution, in the core of a city or within an up-and-coming neighbourhood, your location alone could be lucrative for renters. You could also be smack dab in the middle of a hot rental market if your area has seen growth in specific job sectors that will bring in new residents from other areas looking for a place to live. It’s no secret that rental properties in many cities are in limited supply, despite the fact that there’s an increased demand for options. If you’re not sure what the rental market is like in your area, start doing some research to see if it has the potential to truly pay off for you.
Your House Offers Unique Amenities
While we most often move because our homes no longer meet our needs, that doesn’t mean they aren’t attractive to buyers, or in this case, renters. If your home offers some unique features that you typically take for granted, it’s likely that you can promote that value to renters and be rewarded with a big payoff. Unique amenities can include an outdoor space, proximity to vibrant walkable areas, renovated interiors, newer appliances, ample parking or even being in the vicinity of a great school district. If you know that your location and your property have a lot to offer, chances are renters will see that too.
If the local home buying market is weak, you may want to consider renting your property so you don’t lose out on the future value it could bring to the table as the market strengthens. If you have the ability to keep your current home and rent it out while you buy another, you’ll continue building equity in that property. It may take you several years to build up enough value in equity to equate with what you may get from selling in a seller’s market. It’s better to see slow and steady growth than to sell in a buyer’s market and lose any possibility of future profit as the market changes.
The decision to sell or rent out your home will likely come down to the financials. It’s a simple question of how much you can earn by selling your home versus how long it will take you to make that same amount of money renting out the property. Then you’ll have to take into consideration what will be required of you as a landlord during that rental time period in order to better determine if you’re ready to take the dive into rental property territory or if you’re better off selling and moving on. If you’re not sure how to approach buying another home or what financial commitment may be required to pursue the option that best suits your needs, reach out to one of our experienced team members. We can help you compare your options and approach this decision as strategically as possible.