Should You Buy a House Before Selling Yours
July 12, 2019 | Posted by:
You’ve almost (or have) paid off your current home and are thinking about buying a new one. But before you do, you have to make a decision about whether or not to sell the current property. Do you liquidate and put in a substantial cash downpayment towards a new mortgage? Or should you hold on to the property and build your wealth in real estate? Below is what Winnipeg area homeowners will want to consider.
Five Things to Consider Before Selling Your Current Home When You’re Thinking About Buying a New One
Leveraging Equity in Purchase of New Home
You don’t have to sell your current property to free up funds to buy another. Instead, you can use the equity and piggyback to grow your real estate portfolio. It’s a timeless strategy to building tangible wealth, and is the primary motive for holding on to your existing home, even when moving on up to bigger and better.
Other Benefits of Leveraging Equity in Current Home
Another reason for keeping your existing house when buying another also applies directly to its equity. You can use a portion of the equity towards other investments, ones that may bear an even greater return. This way, you not only grow your real estate wealth, you also diversify your investment portfolio, which is another key to sustainable wealth that will extend for generations to come. View more on how to use equity in your current home to your advantage.
Putting Your Current House on the Long Term Rental Market
Equity use aside, holding on to your current home also gives you the opportunity to generate steady revenue, which can be applied towards the mortgage of your second home. This can be accomplished by putting the property on the longterm rental market. In Winnipeg it is a very viable revenue stream with post-secondary students and tech industry workers, along with immigration feeding the population. A home in a great location and in good condition will be scooped up on the longterm rental market.
Putting Your Current House on the Short Term Rental Market
Another popular real estate revenue option in 2019-20 and beyond, is the short term rental (STR) market - leveraging services such as Airbnb, VRBO, and other STR channels. While STR’s are typically more seasonal, they can offer a greater overall return in a shorter period of time, which reduces your “landlord” workload. View more on why you will want to consider a vacation rental - which is what your current home can become when you buy a new house.
Hanging Tight for a Greater Future Sale
Many people want to unload their second home before entering into a new mortgage out of fear of losing market value. While this is commonly a good idea in many places throughout Canada, especially in light of a recently slower economy, this is not quite the case in Winnipeg where the market is more stable and often more stronger than that of other major population centers in the country. At press, the market value of homes in Winnipeg is on the rise and as new residential construction has slowed after a wave of new builds from two years ago, supply will become more restricted in the years to come. This is especially true as demand grows with the city’s population, straining supply to your benefit, and driving up the price of your current property. On the flip side, waiting to enter into a new mortgage can have you paying more, so the general consensus is that it’s a good time to hold on to your current property for a little longer, while it’s an even better idea to buy now when the prices remain VERY affordable. Factor in the extremely low mortgage rates of 2019, and you simply can’t miss.
Contact Ron Chan today discuss a mortgage on your second home.