You’ve recently decided to shift your professional focus and re-educate yourself to pursue a second (or even third!) career path. The two year re-training program you’ve selected is in a different city than the “home” city where you’ve lived for the last 15 years. And, once completing this program, the cities offering the best employment opportunities for your new, next career are either in the same city where the program is or in different place far too long to commute to from your home city.
What to do with your home in your home city while you’re relocating to another city…sell it, rent it out, just keep it empty for a minimum of two years while you’re a “student” again?
Because real estate is such an illiquid asset, “time” becomes your most important consideration when considering what to do with you home while living in your re-training city. If you have the financial luxury to essentially pay for (buy or rent) a home in your re-training city while you’re preparing yourself for a different professional focus and to “do” nothing with your home in your home city, then pay the housing expenses for the two homes.
If you haven’t that financial luxury of supporting two homes in two cities, here are some things to consider if you’re leaning toward renting out your home city home during the minimum two year period you know you’ll be living in another city:
- Home prices typically increase at just above the rate of inflation. If inflation begins to increase 1-2% a year, the price of your home in your home city could increase by 1.5-3% per year as well. Renting out your home in your home city would enable you to, hopefully, cover the housing expenses in your home city while watching the value of your home appreciate.
- On the other hand, housing costs and expenses could reach 6-10% of the sales price. This includes the selling costs of the home city home such as sales commissions, transfer taxes and fees, title insurance which sellers often provide, moving costs, storage costs, move-in costs.
- Think about the costs associated with renting out your home. While renting out your home, who would your tenants call if there were a repair or emergency situation in the house that required immediate attention?
- Know that some owners, not all, get a real estate tax break while they are living in their “primary” residence. That tax break can disappear if and when the primary residence becomes a rental property.
There are some advantages to selling the home city home now. You could take advantage of a lively spring/early summer selling season. There would be no worries and stress about finding good tenants, rising property taxes, repairing broken appliances, fixing an unforeseen structural problem in the home city home.
And, if you were to sell the home city home now, all of your energy and attention would be free to concentrate on you new professional focus.
