4. Home Keeping Alternatives

Stay in your home, rent out your home, & more

4. Home Keeping Alternatives

Moving: To Sell or to Hold & Rent?
Even if an owner occupant planning on moving, those who purchase a home sometimes have the mindset of investing, sometimes along the lines of buying and "flipping" whether or not it's a fixer upper & sometimes more along the lines of buying and holding.

Some people, myself included, will buy properties as an owner occupant with the intent to later leave the home & buy another property without selling the first. They do so in order to profit from the rent and transition the property from a liability & discounted housing payment for themselves to a true investment.

If buying & holding, it's important to note that if using financing for your next purchase, you often won't be in as strong of a position financially typically as when you bought your last home unless (in most cases) your income has substantially increased since when you made that purchase. The reason why is that any income that you have from a rental property will typically count more negatively than positively toward your next purchase because of restrictions on rental income counting and because of the home that you would be renting out counting negatively toward your debt to income ratio if you have a mortgage on it & don't have unusually high "cashflow" on your profits.

Staying in your home:
If you don't need to move areas immediately, some will opt to stay in their home longer in order to acquire more equity on their home in an appreciating market like we have in 2021. That said, if you're planning on buying a more expensive home, it makes more sense to sell sooner rather than later, because just like your home is appreciating, so is the home you're buying if in the same area. If not selling and buying in the same area, be sure to check the appreciation projections in the area that you're looking to buy in by inserting the zipcode for there & where you're looking to sell here: https://www.zillow.com/home-values/ Keep in mind that sales is seasonal as well, where homes typically sell within a given 1 year time frame with no appreciation for the most in May-July and for the least in January.

Some sellers absolutely love their homes & hate the idea of leaving, but because their income isn't what it used to be, the home that they have been in for 15 years is no longer affordable. For sellers like these, it's important to check your interest rate, compare it to current rates, and look into refinancing opportunities for stretching out their mortgage another 30 years at a potentially lower rate. In some cases, there are special programs to reduce their rents as well, such as with NACA. https://www.naca.com/save-the-dream/
For those who want to stay in their homes who have paid it off, a reverse mortgage may be an option https://bit.ly/2W8fSHB

Another option for those who want to stay in their home is renting out rooms. While not for everyone, I did a month long test while a bachelor and was able to successfully receive rental income from renting out 2 rooms in my home that essentially covered the mortgage. That said, many engaging in this practice break the law, so it's important to check with your city laws regarding what's allowed & any permit/license required as well as restrictions on the number of unrelated people in a home.