Should we rent or sell our home?
By far the toughest decision we have had to make for this move overseas was what to do with our home in Vancouver.
Do we sell it? Do we rent it?
Both had their pros and cons and neither was a clear winner in our minds. The thought of selling it and leaving with no consumer debt and a nest egg in the bank sounded beautiful. But we know that Vancouver is our hometown. We’ll be back. We just don’t know when.
Chris and I debated the topic many times before we even knew if we were going.
Selling vs renting your home
Why sell it?
Finally be debt-free: moving can be a clean slate for a lot of things. Who doesn’t enjoy having a fresh start and getting into good habits? It would be so nice to move overseas and start the habit of saving, instead of living with debt and having to send money home every month to keep paying if off.
I don’t want to be a landlord: even if we use a property management company there will be stress with renting it out. What if it sits empty? What if things break? We live in an older building and it’s great, but quirky. The washer dryer needs some TLC but with a tenant it may just need replacing. Getting additional bills for repairs from a property management company would suck.
Mortgage shortfall: even with rental income we will still need to cover a shortfall for our mortgage and strata fee payment.
Why rent it?
Realtor and Mortgage fees: between the realtor commission and our insane mortgage payout (we’re at the beginning of a five year closed mortgage) we could lose almost $40,000 off the sale price. Gulp. We’d still make $ and the market has gone up since we bought 1.5 years ago. In fact, our realtor (who we really like) did an assessment and by the numbers the value of our home has gone up $45,000 since we bought it. But that’s a lot of $ to lose if we think we will be back here some day and buying a place.
Stay in the ridiculous Vancouver real estate market: we know we want to be back here some day. We just don’t know when that will be. It’s possible we could come back in five years and we would be priced out of the market. It’s also possible the market, like most other real estate markets, will finally have a big correction and we would be better off selling now.
We can’t predict the future. Both what the market will do and where we will be in five years. But if we know we want to end up here it would be nice to have a home to come back to.
Final Verdict
We’ve decided to rent it out.
For now.
If it gets too messy or we find it too much work, or we’re bleeding cash with repairs, we will revisit selling it. We’re hoping our other income streams – Chris will still have a bit of revenue from his small business and whatever I make writing – will cover the mortgage shortfall.
I’m not ecstatic to be renting but I am relieved I’m not getting our home “show ready” with a toddler around.
UPDATE: well, many years later it was definitely the right decision to rent our home out rather than sell it. The real estate market here continued to grow and we were able to sell our home in the city for a considerable amount and buy a house in the mountains for a fraction of our selling price. Keeping this condo set us up to retire much earlier and allowed us to make a big lifestyle shift.
Anyone else had to make the decision of renting vs. selling? What was your decision?
Hi!
My husband and I were in the same situation as you in the fall of 2009. We are also from Vancouver, and owned a small house near Fraser and 23rd ave (we intend to return to Vancouver in late 2013). We moved to Brisbane, Australia for my husband to start medical school and for me to start midwifery school in Jan. 2010.
We were similarly torn between renting and selling, and decided to sell. Our house was in good shape before we left as we’d put a lot of work into it, and though we planned to return to Van, we were fairly certain we’d need a different space when we returned (indeed, we had our second son 2 months ago!). With that in mind, we didn’t want to have to pour a lot of cash into fixing the house up in preparation to sell in a few years time, as we assumed it would have been at least somewhat trashed by 4 years of tenants. The market was also up from when we bought it in 2007, and we ended up making a fair bit of cash on the sale (~$80K). Who knows, as you say, where the market will be in a few years – maybe we made the wrong choice… but the other bonus was we have been able to invest our earnings along with our original down payment from the house in a lucrative savings plan here in Aus, and the income from it is allowing us to survive (frugally!) while we are both studying.
Anyway, not sure how relevant this is to you, but thought I’d share 🙂 As a comparison, my brother-in-law and his wife also moved to Brisbane, and kept their home in Victoria to rent out. They have lost thousands on various things – appliance replacement as well as having to leave it unrented for several months (even with a rental agency in charge). This may not apply to you since you have an apartment, which will be easier to maintain than a house.
All the best! Love reading your blog 🙂
Sarah
I haven’t been in that situation, but I would be loathe to get out of this housing market, as well. Unless I knew for sure I wasn’t moving back. We bought our house in the suburbs 8 years ago for $265,000. It would be more than twice that now. If we spent our equity, it would be pretty hard to get it back.
Wow, not an easy decision. Don’t leave “selling” off of your options yet. Being a landlord (especially when you’re out of town) is not fun. We tried that with property we had in Texas after we moved to Washington State.
Here are my thoughts on your situation:
1. If you have an opportunity to be debt-free from selling this property, I would jump at it. In this economy (which will be stalling for a long time) being debt free and flexible (not tied to a house) will give you a clear advantage over everyone else.
2. Don’t worry about getting priced out of Vancouver (is this B.C. or WA?). I’m assuming you’re in B.C. We’ve just experienced the largest global real estate bubble in history. It’s not coming back any time soon, if at all. Furthermore, we are either going to experience a long bottom or we haven’t hit bottom yet. (I have a real estate background… we sold all our property and rented for 5 years in anticipation of the crash.)
3. Yes, there is a slim chance you could come back to Vancouver and cannot find a place to live. BUT consider this worse-case scenario if you rent it out: You end up experiencing bad tenants who don’t pay rent, or there are long periods where the property sits un-rented AND it’s depreciating at the same time.
(Our last landlord paid $1200 more per month over our rent to pay his mortgage on a house that was losing 25% per year in value. Crazy.)
As you can see, I’m opinionated. Just stay open to selling… you might think about it again in the future.
Whatever the case, you’re off on a great adventure!
I have a little house that I’m renting out. I tried it for 3 years, we are now selling. Our house was so cute and clean, not anymore. But not horrible, the tenants have been good tenants, no holes on the walls or anything, but definitely not like thew way we had it. There might be some damage to the hardwood floors.
I’m glad we didn’t sell three years ago. I’m glad we gave it a try. Now I’m going to pay who knows how much to make it presentable for the buyers.
Renting out wasn’t a horrible experience, but I wouldn’t do it again.
That’s a tough decision for sure and lots of money to consider walking away from.
When we decided to move in with my parents we put our house up for sale and planned to leave most of our furniture in it to leave it staged. I figured we would slowly deal with the furniture or just leave it as is until it eventually sold.
About a month later our agent asked us if we would consider renting to a local family whose house burned down. They were a young family with two kids and went to church with our neighbors. We hadn’t considered renting before but decided to help them out.
Fast forward six months and we found out when it was time for them to leave that they had flooded our wood floors in the kitchen so the whole floor had to be replaced, trashed the walls and carpet and left garbage around the back of the house. Then they wanted to sue US for not giving them their deposit back. What a nightmare!
We only live 30 mins from our old house now but even that has been a hassle to go meet repairmen or get it ready for an open house. I sure can’t wait for that house to sell! 🙂
I’m so excited for your move! Best of luck!
We are heading out to do some long term traveling and we’ve decided to sell. We don’t care about losing money in this market because there’s always more where that came from and we don’t need a lot to survive now that our lives don’t revolve on working to buy stuff. We just want to get rid of the headache of home ownership, repairs, etc., and we want to feel completely free to move on to what God has in store for us next.
That being said, we want to leave now and the house isn’t sold so we are renting it out till it does. Renters are moving in May 1st and we will be on our way. So exciting!
Great attitude, Lara. Would love to hear more about your long term traveling plans.
Hi Rachel,
You’ve had some huge decisions to make these past two weeks. Whew!
It may be easier to find reliable tenants than to sell right now anyway. Of course, I’m basing my opinion on the current housing market and tight lending regulations in the U.S. And your right, the real estate commissions and fees take such a huge chunk of your equity, it would be hard to say goodbye to that $40,000.
If you rent your house and it doesn’t work out, you can always decide to sell. And if you rent your house out and you want to come back to it, you can. And if that’s really a photo of the view from your place, I don’t blame you for wanting to keep it in the wings!
I’m looking forward to hearing the real inside scoop of what it’s like to rent out your house. 🙂
The photo is a view of us! We are in a building just to the right of the photo. It really is beautiful here and we love it. The downside is that lots of other people love it too – the real estate market here is insane. A fixer-upper house anywhere near here starts at a million.
Definitely rent despite the hassle. Property in Vancouver will always be valuable and you will be kicking yourself upon return if you are priced out of the market.
I feel like only Vancouverites can understand the sheer insanity of the real estate market here. It continues to defy all trends and odds. Scary. Thanks for the vote of confidence in our choice.
We bought a house that was an hour long commute from hubby’s work…after almost a year decided it was too difficult and moved back to the city, but we would have lost money on the sale, so we’re renting it.
We actually have great renters, but I still wish we would have sold it. We’ve already had to buy a new washing machine, property taxes were just raised, one of our renters is moving so we have to update the lease…it’s just something we always have to be worrying about at the back of our minds.
We actually do love the house and the city it’s in, but don’t think moving back there is likely…it’s more about the investment at this point. I really go back and forth deciding if it’s worth it.
I do know that if selling it would get us out of debt, I would do it in a second! 🙂 But it’s not Vancouver either, so if we ever really did decide to move back to that city, I don’t think getting a house would be out of the question.
Wishing you luck with whatever you end up doing! 🙂
Our washing machine and dryer are on their last legs… I am wondering if we should just suck it up and replace them now or wait it out. Decisions, decisions.
I haven’t been in your position but I’ve thought about it (in case we ever move to the Netherlands – my husband’s country).
I think I would almost definitely rent rather than sell, especially if I knew it was unlikely to be a “forever” move. I’m a typical Brit – I believe in bricks and mortar being the safest place to keep my money long term.
Such HUGE decisions for you to be making. I don’t envy you. Big decisions always freak me out a bit – the pros and cons lists always seem to end up equal lengths…
Karen (Scotland)
Every time I have a small panic about the decision or the move I just keep telling myself they are just decisions. Some will work out better than others. And it feels great to just make the decision and be done with it. No more mental energy wasted on it.
It would be fantastic if you could rent to somebody that you have a connection with (friend, relative, friend of friend), as those people come with character references from people you trust, and are more likely to treat your place with respect, since it doesn’t belong to some anonymous evil slumlord.
I’ve also found from experience (used to own a couple of rental properties) that it is much better to set your monthly rent on the lower end and thus have a larger pool of potential tenants from which to choose. Affordable (not cheap; just fair) rent tends to draw hardworking and responsible tenants who are happy to get a bit of a break, will generally treat the place as if it is their home, and will often not trouble you for trivial matters. They’ll sometimes even be super keen and make upgrades to the suite at no cost to you.
Also, make sure to get a really well-organized property management company who thoroughly checks references/credit/past rental history and conducts regular quarterly inspections of the suite. I can make a couple of recommendations if you don’t already have someone in mind.
Great tips on renting – thank you.
I’ve done a bit of research into the rental market and our building, and ones like it, have widely different rental rates for similar units. I would much rather rent it out for a bit below market and find good tenants that will stay for a few years.
Sending you an email now for property management recommendations.
We rented out our condo for a few years after we bought our house. Both were/are in Portland though and we did the property management ourselves. We had some wonderful and some not so wonderful experience with tenants.
It sounds like you’ve really thought it through, but another option would be to rent it furnished as an executive or vacation rental. There’s a great website called airbnb.com that we’ve used and really like, but there are others as well.
Also, if you have a friend or neighbor who could act as the property manager, that might save you a lot of money on their fees. My parents bought a townhouse in Arizona when my brother was in college there. Since the market tanked, they rent it out and the couple next door helps with onsite property manager stuff for a much smaller fee than a company costs.
Best of luck. Such an exciting adventure!
Dana
Thanks for the tips, Dana. Going to go check out your blog – from the title it should be right up my alley.
Great, I just found you when you wrote your first in the series for Mothering.com. I added your button to sidebar 🙂
Thanks, Dana! Checked your blog. Great mix of recipes and nutrition info. And I’m a former PAC-10 alum and NCAA Champ too! UW NCAA Rowing Champ, ’97, ’98.
I think you made a good decision to rent – as Vancouver is a city with a ‘finite’ amount of space, real estate will not likely decline (much), as there will always be a demand with limited supply.
If you move back you may not go back to that place, but at least you will have equity in the market.
If you don’t come back and want to sell – it will more than likely still be worth more then than now.
that my 2 cents…..
Thanks, KT. Vancouver real estate has defied national and international trending for a long time. So many people want to live here – us included.
rather “they rented out their London home”
…it’d be great to see the future, wouldn’t it?
Here’s what my accountant friends did when they were in the same situation:
They lived in a very nice part of London, paying a huge mortgage. They rented their home for a year, and once they decided they liked their ex-pat life, they sold their lovely apartment and bought a smaller and significantly cheaper one in an area, where tenants were always guaranteed. They have therefore a property (a foot in the door?) in the city they’ll eventually settle down, yet it is very rentable, cheaply furnished and they don’t have emotional attachment to it.
I like this idea and could see us doing that in a few years. Once we are settled in our new home I think we will have a better idea of how long we will be away.
Always looking for a crystal ball!
We had a sell vs. rent decision a few years ago (down in the Seattle area), though most other things were different. We started to build a house a few miles away on property when the market was good and with the intention of selling the house we were in. By the time the new house was finished, the market tanked. Though we weren’t under water, we didn’t want to lose that much money in the house and decided to rent. We have been renting it out for over two years now with two different groups of tenants. They have been great with no worries at all! I think it helps that there are more renters that are looking for rentals than there used to be.
Nice to hear a positive renter story. Fingers crossed we have the same.
I don’t think I would have chosen to rent, but I have never been in that position, nor had to make a similar decision. It’s a tough, and emotional, choice to make. Also, I have no idea about Canadian taxes… just US ones, and US taxes typically give huge tax breaks for people selling their primary residence, unless they move out.
The bottom line is that I think we all choose what is best and right for us at the time we make those decisions. You have a lot of other more pressing things to decide on right now, so it must feel good to have that one checked off the list. 🙂
It’s been a very emotional choice for us. Seeing more and more that getting out of debt and having solid finances isn’t just about the numbers.
Decision made – now hoping the tenant part falls into place.
There are a lot of homeowners in the same position right now. We’re a military family and we decided to keep our home and rent it out (through a property management company) rather than face a loss. Our neighbors (also military) decided to take a loss and sell. I suppose in a few years we will see who made the better decision… We’re hopeful that market improves and we can sell in the future. Like you, we would probably be unable to afford another home in that area if we didn’t hang on to the one we own now.
I haven’t commented here before, but I enjoy your blog.
Thanks, Heather. And I just checked your blog and wow, that is a handful. I’m a twin myself from a family of six. Best gift my mom ever gave me was five siblings.
Hi Jenny – we have a deadline for this Friday on listing it with a property management company. We have a friend interested and they are still deciding if they will take it. That is a big factor. Having someone we know rent it has some drawbacks but would mostly be a positive.
Our realtor is great and I know she will do a great job for us if we decide to sell it while we are overseas. Of course, once we are non-residents there are some confusing tax implications to selling… yeah, complicated decision.
Keep me posted down the road on how selling goes for you. And the Scotland move – how exciting!
I struggled with a similar decision when my husband and I got married. We both owned condos, his closer to our current jobs, mine in a better school district. We originally decided live in his and to rent mine out, thinking we may move there some day with kids. Unfortunately, we never found a renter we were comfortable with so we ended up selling instead. It was a really difficult decision, and I still think we may end up buying in that town again, but I appreciate that we tried. Hope you have good luck finding a renter!
These are tough decisions. I do try and remind myself that I can’t predict the future: bad renters, real estate market tumbles or sky rockets, etc. So best to just make a decision with current information and go with it until it’s no longer the right decision.
Thanks for the encouragement =)
We’re going to be in this spot next year and we’re choosing to rent out our house. This is on the basis that we have somewhere to come back to if it all goes wrong (hopefully not!!) and that it keeps us on the housing market in the UK.
Every time I read about how much you have paid off on your mortgage I get inspired. I was over catching up on your blog and picked up your home renovation thread. Nice work!