Is Buying Another Home While Selling A Good Idea?

I often get asked whether buying another home while selling your current one is a good idea. Sometimes, buying before selling does make sense for many reasons.

 

It’s important to remember that buying another home should always be done with the future in mind because you are planning to move again. The point of buying another house before selling your old one is to have somewhere else to live until it sells, after which time you would then buy the new place.

 

For example, if someone buying a new house was having difficulty selling their old one or just wanted cash flow, buying before selling could be advantageous. If these things are not considered when buying first and selling later, buying might not be as beneficial.

 

Several factors are involved when buying another home to live in, while selling your current one. Everything should be taken into account, everything from how long you’re planning to stay there, the buying process, whether it will be rented or occupied, and if buying saves you money overall. We’ll discuss each of these items in detail below.

 

How long are you planning to live at your new location?

 

Before buying another house, one thing that is important to consider is how long you plan on staying there until you sell your old one. If buying before selling makes sense because it’s only for a few months, then buying probably isn’t worth much time spent looking around for good deals; however, buying could mean living somewhere up to six months or longer, buying could save you serious cash.

 

For example, if someone plans to live somewhere six months and buy before selling to save $1,000 a month in rent, buying is worth the extra effort to look for a good deal. On the other hand, buying another house if it’s only going to be lived in for a few months isn’t worthwhile because rent will probably be similar at that point, and buying might not save much money.

 

How long do you expect it will take to sell your old house?

 

This question ties into how long you plan on staying at your new location. The amount of time it takes to get rid of an old property depends on several factors such as market conditions, price relative to others, condition of the property, and many more.

 

If buying another house before selling your original one will be for a short amount of time, buying is not likely worth it because market conditions might change within the time frame of purchasing and selling.

 

However, if buying will mean living somewhere six months or more prolonged, buying is probably worth it because you won’t have to pay rent at all during that period depending on where you buy.

 

Renting or buying?

 

Whether buying before selling makes sense also depends on whether it’s going to be rented out or occupied by someone who plans on purchasing the property once they sell their current place. If buying another house means buying and settling it, buying definitely makes sense as long as you plan to stay there long enough to get back the money you invested in buying it. This is where buying might save real cash in areas with a high rent-to-purchase ratio. On the other hand, purchasing and renting out another property likely won’t be worth buying because buying another house will cost even more than renting it from someone else.

 

If buying a new home has a lot of tax implications, buying could also save money by taking advantage of depreciation and other deductions. These types of factors can vary depending on where you live, so talk with your tax professional about whether buying another house means being able to take advantage of tax benefits similar to what most homeowners receive at least once or twice during their lives.

 

Where will you live between buying and selling?

 

While buying another house to live in before selling your current one is a good idea if buying for six months or more, buying might not be worth it if moving costs are high. For example, buying somewhere further away from work means more time commuting to eat into the potential benefits of buying before selling.

 

The main point discussed throughout this article is how much purchasing another house before selling should help or hurt the bottom line compared to renting somewhere else after selling your current home. Savings might be in the form of buying a cheaper property or experiencing tax benefits that renters don’t receive.

Whether buying becomes worthwhile depends on several factors, so each situation should be considered separately based on different circumstances. The topics discussed in this article also apply if you are building a house and you need a place to stay during the construction period.

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