Should You Sell Your Home Before Building a Home?
By HiLine Hal
If you are planning to have a residential home builder construct your custom home, you are likely contemplating the pros and cons of keeping your current home as an investment. A lot of landlords make a good sum of money with rentals in the Northwest. If you talk to a real estate agent, he or she will try to persuade you to sell your home. If you talk to a property manager, he or she will try to persuade you to rent out your home. According to a recent article by Zillow.com, buying and selling a home is trickier now because of the opportunities with rental properties. If you recently invested in land in the Northwest, you made a smart move because land is a valuable commodity.
Selling your current home
One option is to sell your current home and use the money toward the purchase of your custom home. If you use a real estate agent, you’ll have to pay commission costs as well as closing costs to sell a home. If you have owned your home for at least two years, you won’t owe capital gains taxes up to $250,000 for an individual or $500,000 for a couple. If your home has appreciated a lot in value, you may want to consider turning it into a rental instead of paying capital gains taxes. When you sell before you purchase a custom home, you typically have more money to spend.
Buying before you sell
Some people don’t mind making the leap to buy a custom home before they sell their current home. If you know your home would work great as a rental property, you aren’t taking on much risk by buying before you sell. Buying before you sell may or may not put you under more pressure. Make sure you have a backup plan if you buy before you sell. Calculate the cost of juggling two mortgages. If you own your current home outright or plan to pay cash for your custom home, you won’t have the same worries.
Some people build a custom home on their current property with plans to turn their current home into a rental property. For those with plenty of land in the Northwest, owning two homes provides flexibility and options. You can look after aging parents or invite your grown children or grandchildren to stay in a guest house.
At HiLine Homes, we help our clients with financing options to meet their needs. Our new home consultants will show you a variety of floor plans and finishes for your custom home in the Northwest. For more information on our custom homes, please contact us.