For one, you may have outgrown your starter house. What was the perfect size for you or you and your spouse might not have enough room when little ones are added into the mix. Or you may be ready for more space now that you are more financially secure.
Whatever your reason, before you rush out and sell your starter house, you may want to consider turning it into a rental.
Here are some things to think about.
Can you make money on it?
There is no point of selling the house if you are not able to make money on it. Take some time to look at the cost of selling the house and what you owe on your mortgage to see where you will fall in the end.
Once you have this number, spend some time investigating how much money you could make if you turned it into a rental house. Would you be able to cover your mortgage and expenses each month from what you would collect in rent?
Don’t forget to factor in expenses like making repairs as things break. You want to be prepared for everything.
Is your house ready to sell?
Consider what projects would need to be completed to get your house ready to sell. Talk to a real estate agent in your area and find out what recommendations they have for projects before selling your house. You can also find out from them what the comps look like in your area and what you should be able to sell for.
If you are going to have to put more money into your house to sell it for what you want to get out of it, you might want to consider renting for awhile and making the upgrades slowly as you pull in a monthly profit from your house.
Can you move on without selling your house?
You may love the idea of renting out your starter home, but if you aren’t able to secure a second mortgage, then you are going to be out of luck. Talk to a lender to see what your options are.
If you are unable to move into something else while still holding your original mortgage, the decision will be made for you.
Can you handle being a landlord?
Being a landlord is a lot of work. You need to be able to deal with collections if your tenant isn’t paying, and you need to be available at all hours of the day. If a pipe burst in the middle of the night, you are the person that is going to be getting the call.
It’s a big responsibility and one that you shouldn’t enter into without carefully considering what it really means.
When you are deciding whether to rent or sell, make sure that you leave your feelings out of your decision. You may love that house because you are attached to it, but that doesn’t mean that it’s not time to sell it and move on. But it could also be a great opportunity to get into the real estate investment game.