When a homeowner purchases a new home, then there are certain reasons behind this change. Relocation, accommodate the growing family, or looking for a small house are some of the reasons for purchasing a new home, even when you have your own house. When it comes to purchasing a new home, then it is not always mandatory to sell your old house.
You can rent out your old house and get some money in your hands. Also, you should purchase budget-friendly new home such as affordable houses for sale Honolulu. It is not just helpful for generating more income, but also helpful in various other ways.
Let’s discuss various benefits of renting out your old property after purchasing the new one:
Why Renting Old House?
It may sound easier to sell your old home while shifting to the new place. But, selling a house at a good price is not an easy task. There are various advantages of keeping your old house and using it for rental purposes. Some of the benefits of renting your old house are discussed below:
New Source Of Income
The amount you will receive after renting your old house can be used for the mortgage payment and monthly condo fees. You can use the rental money for the home repair and paying installments of home insurance.
Easier Than Selling
Finding a person who will take your property for rent is much easier than searching for the buyer of the property. Renters know that they are going to use the house for a temporary basis; therefore, they are not concerned about the structural integrity or leaky faucets. If the location of your house is near to the workplace, then you can easily find new tenants without any trouble.
Repair And get High Rent
You should do the little repair in your old house and make it visually appealing so that you can ask for the high rents from your tenants.
Overcomes Hurdles While Buying New Home
It is possible to purchase a new house and rent the one simultaneously. You may face some hurdles while doing it. But, by considering the following points; you can easily overcome various hurdles.
Pick Right Home Loan
First of all, you should take a look at the existing mortgage. You should wait for some time before your previous home becomes the rental property. You should properly read the clauses of the mortgage.
If you will immediately take action without reviewing the existing mortgage, then .you may have to pay a penalty. If your existing mortgage has a clause that does not allow you to use your residential property for rental purposes, then you should consider refinancing a loan that allows it.
Down Payment for New Home
Most lenders will ask you for 20% as a down payment for purchasing your new home. In case, you meet certain financial conditions, then you may have to pay a small amount as the down payment.
But, if you pay the small down payment, then it will lead to a surge in the interest rate. Ultimately, you will have to pay more for your new home. Thus, you should wisely pay the down payment for your new home.
Consider Home Insurance
It is imperative to consider reviewing the homeowner’s insurance policy. If you want to rent out your old house, then the carrier mats demand the changes in the insurance. You should talk to the insurance contract and find out how the annual installments for home insurance will change.
The carrier may need to make changes if you plan to rent out your home and may require supplemental coverage or landlord insurance. Ask about how your annual rates may change.
Is It Budget-Friendly?
Before renting out your old property, you should make sure that whether it is a good idea. While purchasing a new home and renting out your old one, you should properly examine every point so that you can determine whether you can handle the responsibility of two mortgages.
The best way to handle the mortgage of two properties is to purchase the affordable new house just like affordable Hawaii home plans. Before purchasing a new home and renting out the old one, keep the following points in your mind:
Find Out Reasonable Rent
If you want to get more rent than your expenditure, you need to be competitive so that tenants get ready to pay high rents. One of the best things that you can do to make your old house competitive with other rental properties is to make your old house visually appealing. You should subtract the expenses from your rent. Make sure that outcome is positive.
Vacancies Happen
Sometimes, you may not be able to find the new tenants immediately. There would be many times when your rental property would be vacant. Therefore, it is imperative to maintain the spate financial reserve to compensate for the vacant property.
