When it’s time to move, selling should be the last thing on homeowners’ minds. Instead, they should first consider the investment opportunity before them.
I’ve worked in the Boston area real estate business for more than 15 years, and after speaking with hundreds of people about why they sell their homes when they move, the answer often boils down to, “We knew our home was a great investment and could make a great income property, but we didn’t want to take on the responsibilities of becoming a landlord. Selling was easier. I wish I still owned that home.” These types of responses got me thinking, what if it was easier to continue to build wealth in a current home while moving into a new one?
This is exactly what my company, Knox Financial, is working to achieve.
If you live in the Greater Boston area, and are considering selling your home this spring, ask yourself the following four questions first:
1. Do you believe in the long term value of the real estate in your neighborhood?
During the last recession, the worst in generations, we hardly saw a dip in home prices in downtown Boston. The same can be said for lots of cities across the US. Home prices will sometimes go down in the worst of times, there is no doubt. But overall, with a long term investment strategy, the average home will grow in value. I wrote a white paper that further explains this point, which I encourage you to take a look at — https://knoxfinancial.com/download-market-study
2. What are average rents in your area?
You probably know what you used to pay in rent and what your friends and neighbors are paying. A quick search on Zillow of your neighborhood will tell you average in your area. Then, think about what it costs to live in your home. Some quick mental math will tell you if your home can be a profitable income property.
3. How much equity do you have in your home?
Redfin has a great step-by-step process outlined on calculating your home equity. If you’ve built up a good amount of equity in your home, or you have saved cash in addition to the equity you’ve built, then you should be able to put an appropriate amount down on your next home while converting your home into an income property.
4. What is your mortgage interest rate?
If you purchased a home between 2011–2017, or if you refinanced during those years, you probably received a lower interest rate than today’s current 30-year fixed rate of 4.375%. It sounds funny, but your debt may be your best asset. You’re pretty much the only person in the world who can own your home at such a low carrying cost. This is an opportunity that deserves exploration.
Instead of going through the four steps above, you could save yourself time and just get in touch with Knox.
In my last post, I described how Knox can help homeowners who are planning to move continue to build wealth from the homes they already own, without having to moonlight as a landlord. We’ll be completely honest and tell you if your home will make a good income property. We’ve developed tools that allow us, in a matter of seconds, to project how your home will perform as an investment property. You can head over to knoxfinancial.com, or get in touch with me in the comments section below.