Do you remember the first time you fell in love?
Of course you do. It’s unforgettable.
You were so enamored that the rest of the world ceased to exist. You couldn’t even dream of being with someone else, and the world was filled with rainbows and unicorns and smiling children.
Until, you started to see the cracks. Sound familiar? Maybe it does.
We are curious creatures. We rationalize our decisions based on emotional impulses. This holds true even for the home we stay in. We create a bunch of memories in the home and grow attached to it. But for reasons big and small, sometimes it just isn’t the right place to stay in anymore. Maybe the neighborhood has grown too noisy or too crowded. Maybe the water supply isn’t as regular as it used to be. Maybe the rooms that seemed gigantic when you were a bachelor suddenly seem cramped now that you have a family.
Whatever the reason may be, if you’ve finally decided to move out, you have a choice to make – do you sell your house and get a new one, or do you rent it out and look for something else?
Let’s take a look at some questions that might help you decide.
• If you decide to keep your current house, do you still have enough money to buy a new one?
When you buy a new property, you need a certain amount of liquid finances to close the deal. You need a down payment to secure your new property. Usually this comes to around 20-25% of the total cost of the property. A quick glance at your bank account and your current income stream will let you know if you have enough money to get this done.
If you don’t have enough cash at hand, it’s probably best to sell your current house, so the windfall of money will help you raise the finances for your new purchase.
• Do you fancy being a landlord?
We’ve talked about this elsewhere on the blog , but it’s worth mentioning again. To make a long story short, being a landlord isn’t always a picnic. It involves a lot of effort and dealing with people that you may or may not have time for.
If you still think that renting out your house is the best choice for you, you could contact a professional property management firm and let them do the hard work for you.
• Will you generate a reasonable amount of money if you rent out your current apartment?
When you start to look at your property as an investment, you must consider it objectively. Is your house in an area where you think you could generate a rental amount that justifies not selling the property? Are the expenses of renting a property over time prohibitively large?
Ask yourself these questions and get an expert opinion to determine if it’s better to rent your current apartment in whatever market conditions may prevail in your particular locality.
• If you have enough money to buy a new house, maybe you shouldn’t buy a house?
OK, that might have sounded confusing. But consider this, if you have say Rs. 10 lakhs available for you to invest. Do you think buying real estate is the best option currently? If you are someone who understands the risk-to-reward ratio of investing in real estate, by all means, go for it. But if you’re primarily doing this to ensure a safe, long-term investment, you could think about other avenues – a mutual fund, for example. That market is less risky and may not have immediate exponential financial benefits, but it is a secure source of income.
These are just some of the things you need to consider if you’re thinking about moving out of your current house. Depending upon your situation, you might want to sell the current property entirely and move on, rent it, or even decide not to buy a new house at all. Make sure you are informed and consider all of the options before you make such a big decision.