Should we buy first or sell? This is a question I get asked all the time by people in my seminars who own homes and are thinking of downsizing. No one wants to get stuck with mortgages on two houses and there are always fears in an uncertain market that one’s own home may not sell quickly. Selling the home you own first does provide that certainty, but what if you can’t find your dream home? For many people, renting while they look holds little appeal.
There are a couple of options that come to mind. First, you can try to negotiate a long closing for your house. A buyer may agree to two or three months, which is ample time to find something you like.
I was chatting with a neighbour today who expressed concern about how if they bought another home when the market is soft, they won’t make any money on their existing house either. Buying low and selling low wasn’t all that appealing. I suggested she consider renting one or the other; the idea hadn’t occurred to her.
In Ottawa currently, our vacancy rate is less than one per cent, so you should be able to find good tenants. My advice? Look for that dream house. If you find it, you can move into it right away and rent out your existing house, then sell your existing home when the market is optimal.
Alternatively if that dream house needs renos, rent it out first, and stay where you are until you can get top dollar for your current home. That way you can renovate the property you plan to live in before you move in, instead of renovating it for a tenant. After all, even the best tenants are unlikely to care for your home the way you would.
And be sure to talk to your accountant. There are write-offs you can benefit from to reduce your tax burden; he or she can tell you how to maximize them.
In a rental market this tight, it’ s not hard to find tenants but if you don’t want to be a landlord, consider using the services of a property management company. They can do the work for you for a very reasonable fee.