Found Your Dream Home? 4 Ways to Turn Your Unsold House Into Income
Every homebuyer hopes to land the perfect new place, but finding your dream home is a lot less magical when you’re stuck with the financial burden of an unsold house.
If you can’t find a buyer for your old house, you might be faced with the prospect of paying two mortgages. In that situation, you might have to consider drastically reducing the selling price for your old house or canceling the purchase of your dream home. But these aren’t your only choices.
Instead, you can find a solution to turn your old house into income. Here are four great ways to leverage your unsold house and move into your dream home:
1. Renovate your old house. If you make a few updates, you might be able to move a house that previously wouldn’t sell. Consider adding one or more of the most popular features, such as a separate laundry room, exterior lighting, Energy Star-qualified windows, a garage storage space, or an eat-in kitchen. Buyers are especially interested in energy efficiency, so adding green features can help, too.
2. Rent out your old house. Renting your old house can reduce your financial burden and allow you to retain two homes while both appreciate in value. This can be a smart long-term option if the market is down. However, remember that being a landlord is a serious time commitment. To avoid headaches, I recommend working with a professional property management company that can act as an intermediary.
3. Think about a rent-to-own deal. Selling your home on a rent-to-own basis or through a lien contract can help you find a buyer at a slightly higher price, and it offers tax advantages. Keep in mind that if a tenant stops paying on a lien contract, you’ll have to foreclose on your old house, and that could tie it up in litigation. To avoid this, I recommend using a rent-to-own agreement then selling on a lien contract.
4. Sell your home to an investor. There are investors in almost every market who will buy homes immediately, even if the homes aren’t in tip-top shape. Selling to an investor might mean you don’t get your ideal price, but it’s still a good way to get out from under your old mortgage.
Buying your dream home before selling your old house might feel like a big risk, but waiting is risky, too. Home prices and interest rates have a tendency to rise, and if you wait too long, you might price yourself out of your dream home. Also, if your goal in moving is to make room for your growing family, get your children into a better school system, or move closer to relatives, time is of the essence.
Don’t let the financial burden of an old house stop you from pursuing your dream home. Instead, use these strategies to shed the financial burden and find the freedom to enjoy your dream.
About Mike Kalis
A speaker for home builders, CEO Mike Kalis has led Marketplace Homes to being named ABA’s Real Estate Company of the Year and Inc.’s 189th fastest-growing company in 2012.