Smart Income: Why I’m Rethinking Selling My Home

I’ve written a couple posts on the downside of being a homeowner. But an old friend on Facebook commented on a thread about selling. He said, “Dan, you should never sell your house.” Here’s why: It can create a smart income.

Smart income: Photo of Dan Erickson in a simple room.
Photo by Deccio Creative

My younger brother owned a few properties and was a landlord for several years. He usually lost money and dealt with crappy tenants. But he also didn’t own in the right kind of neighborhood. It didn’t seem like smart income. I swore I’d never want to rent out a house.

But an old high-school buddy convinced me otherwise in a few short comments on Facebook.

Keeping My House Will Create Smart Income

I don’t know the future. But I do know that I’d like to relocate to a warmer climate as I get closer to retirement age. As long as I’m living and working in Yakima, Washington, I’ll probably continue living in my home. It makes good financial sense

But if I move, I’ll likely keep it, too. It’s simple math. I can create a smart income.

  • Mortgage: $1050
  • Rental Price: $1300-$1400
  • Property management: $130-$140

If I keep my home and rent it out, it’ll pay the mortgage and I’ll make about $100-$200 per month. And I won’t have to deal with the renters. I can hire a property management company to deal with that.

But It Gets Even Better!

By the time I reach retirement age, the house will be more than half paid off. I could easily pay the rest off with a small chunk of my retirement. Or I could refinance and cut my payments in half.

That means I’d make $600-$1200 a month by renting my house out. It’s in a perfect neighborhood for a rental, too. That’s smart income.  

Meanwhile, I could move to a warmer climate and buy another, much smaller house or condo with my retirement income. I’d have no house payment while making an income from my rental.

A House Is A Good Investment

Even though a house might seem like a pain in the butt when shit happens, it can pay off in the long run. 

If you’re considering buying or selling a home, don’t overlook the value of your home as a future investment property

You can create a smart income and still have the freedom to move about.

For more tips on simple living, I have a gift for you. Don’t feel obliged to accept, but I think it will help you on your journey. It’s a free ebook:

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4 Comments

  1. Oh Dan! I’ve been following you for quite awhile and your posts are usually so well though out. But not this one. There is a lot more to being a landlord than hiring a management company. The first two items that come to mind are your home insurance and the cost of any repairs you need to make. There are also fees involved with the refinance you mention. Plus, if you are taking money from your retirement to pay off the house, you won’t have a base income if your house doesn’t rent. You are also not considering your liabilities as a landlord. Overall, while not a bad idea, this is a poorly thought out bit of advice.

  2. I was thinking some of the same things as Loyal Follower. As a landlord, you’ll still need to pay insurance and property taxes, and you’ll be responsible for all repairs that are needed and replacing things that wear out (appliances, flooring, roofing, etc.). The cost of maintaining the home so that it will continue to be a prime rental property has to be included in your figuring. I don’t think you’d make any income at all if you’re still paying a $1,050 mortgage. If you paid off a big chunk with some of your retirement funds, you might make some income (after you pay refinance fees and allocate funds toward repair/replacement/taxes/insurance), but then you’ve given away a chunk of your retirement income. You might wind up only breaking even in comparison with not paying off a big chunk on your current home.

    Your home is probably worth more to you if you sell it when you retire and use what you clear from it (after paying off the mortgage and paying the realtor) to buy yourself a smaller house or condo with cash. You’d have no so-called “smart income” from continuing to own and rent out your current house, but you wouldn’t have the cost of rent or a mortgage coming out of your retirement income, either. That to me seems the much better deal.

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