Making a decision to sell your house and rent another person’s house is a real-estate investment decision that should not be taken on a whim. Sometimes it’s a wise decision, and sometimes it’s not wise. Each occasion should be studied to proffer a solution fit for that situation.
I say it’s wise if the state of the house is in shambles, the design is out of fashion, requires renovations and you do not have adequate funds to upgrade it. A sale will provide immediate funds for you as well as relieve you of the burden of maintenance in operating the house.
It’s unwise to sell off completely if the house is in good condition, you are still single, you have a family with you, you enjoy living in a private environment, you like the outdoors, or you like maintaining a garden.
Maintaining your built house can be expensive, you are not shielded from government fees, and you will not be able to overlook certain fees and repairs, claiming it’s your landlord’s responsibility.
Read also How to Invest in Stocks Using Trove.
Here are the advantages of selling your house and renting.
1. Selling your house and renting will give you more flexibility in relocating from place to place as you desire instead of being stuck in a specific location. If your job requires you to relocate, it will not likely affect your ability and freedom to move.
2. You are free from any form of property maintenance. When you sell your house and rent, that responsibility falls on your landlord. If say, there is a fault in the plumbing or soak away pit, your landlord is required to spend the time and funds required to fix it.
3. You no longer worry about paying taxes or land use charges required by the government where your plot is located. When you sell your house and rent, that falls on the owner of the property you are renting. Whether they chose to factor it into your rent money is not your problem.
4. Owing your house can be done by purchasing a built one or constructing from start to finish. Either way, the initial investment funds are hard to come by. When you sell your house and rent, it’s easier to cover the initial rent fees.
5. When you sell your house and rent, you are not at risk if your property value declines. Market conditions fluctuate, and government policies are changed randomly, and such can devalue your property price in the market.
Read also How to Invest in Stocks Using Trove.
Here are the disadvantages of selling your house and renting.
1. You lose all equity in your house when you sell. You have no legal rights anymore to the house.
2. When you sell and rent, you are in the hands of your landlord. They can increase your rent as they desire, sometimes without prior notice.
3. When you sell and rent, you have limited control over the rented property. There are some changes or upgrades you cannot do in a house you are renting. You must comply with the laws, rules, and regulations stipulated by the owner of the property. You could easily be thrown out if you refuse to obey.
4. Renting is also an unstable venture. If you are forced to move out at any time, this can be challenging for you if you have children in school or you just started a new job in that area.
5. Also, when you sell your house and rent, you lose tax benefits, which can be deducted from your income tax returns.
Whether you choose to sell your house and rent depends on your individual situation. There is no one shoe fit all decision approach to it. You just need to consider your long-term goals and all the facts available to you.
Read also How to Invest in Stocks Using Trove.
In conclusion, I would rather rent or lease my house for a higher price than sell it off completely. This way, I retain equity on my property while I reduce the cost of maintenance for me, then take part of that rent money paid to me, and rent a smaller place. The rent from my house sustains my bills and rent in my rented apartment. I can only do this for a time being, that is, if I’m undergoing any financial crisis.
Also, remember that if you follow this approach, you will need future funds to fix up the interior of your home whenever you wish to reclaim staying in your property again.
In Nigeria, a lot of businessmen build houses in high-brow areas, houses that befit their financial status but they will rent it out, then go to sub-urban places and rent 2 or 3-bedroom apartments and stay there.
Again, most people do this (lease their own building) due to the loneliness of living alone in their own houses. They rather stay around other people in social homes or terrace houses while going about their daily business. When in social houses, they are close to neighbourhood facilities that sometimes are far from one’s built house.
I hope you understand this.
