Your Questions Answered
At Ashlar, I firmly b that an educated home buyer or seller is best equipped to make their own decisions. That’s why I take time out of my day each and every day to answer someone’s real estate question. And, when I think the answer can be useful to you as well, I share it here. So without further ado:
My general advice is that selling only really makes sense if you have a plan for what you want to do.
Usually that looks like, “I want to sell because I’m ready to move to a different area or need a different / bigger / smaller / pool / beach house.”
Sometimes it’s that you want to take part of the money and use it to open a business or invest in something. In that case you can sell and downsize / move somewhere less expensive, or you could simply do an equity line of credit which would allow you to use the equity in the home for the purpose you want.
If you’re thinking about opening a business though, if you’ve never ran your own business previously, you need to be very, very careful and I highly recommend started extremely small and building from a very small investment (like $10,000) versus blowing through $200,000 on a restaurant or startup in 6 months and being out all your cash and now on the hook for a mortgage again.
And final one I usually see is people looking to help out a close friend or family member with school, business, medical, legal expenses.
Renting a place is tricky. It’s pretty much guaranteed that rents over the long term will continue to rise. There is no cap currently on how high rents can go, and they have gone up about 20%-30% in the last 12 months alone. Most call it ridiculous, but these rents get paid every month because tons of people want to live here.
Comparatively, with a paid off home your expenses would be property taxes (probably very low, $1500 – $2000 with the age of your home and what you paid for it), insurance, and then maintenance items like A/C, Roof, hot Water Heater and paint.
Which would come out to …. 24k for maintenance items. Roughly 30k for taxes and probably about the same for insurance over a 15 year period. Which comes out to about 60k over 15 years which comes out to roughly $466 / month in holding costs for a 3 bedroom 2 bath home in the area which is an amazing deal.
Plus you could also hold the house, refinance to take the equity out, buy a smaller place or in a different location, and rent out your current house and very likely still clear a profit every month.
Anyways, you have lots of flexibility, but it all starts with what your plans are and what you want to do.