Making plans to travel for an extended period or indefinitely is exciting. As a home owner, before you set out on the road, a decision has to be made about what to do with your home. Broadly speaking the choices are to either sell it or rent it and the other less considered options are having someone house sit or leaving your home vacant.

For some the decision about what to do with you home is made easily and for others can it can feel impossible to decide. If you ask for advice or opinions from others (and sometimes even when you don’t ask) you will get varied responses as to what’s the ‘right’ thing to do. The opinions of others can often add to your confusion and are often well intended but are based on other people’s personal circumstances and needs.

Lets be clear about one thing – there is no “right” or “wrong” decision here. As it often is, there is only what best suits your circumstances and you (and your partner or family). Whether you are someone who knows what you would do or you are someone feeling very unsure this article aims to provide some points to consider when making your decision about what to do with your house while you travel for an extended period.

SELL IT

Selling your home is an option. Let’s consider this.

The Potential Benefits of Selling Up

The main benefit or reasons to consider selling your home is to make a profit or in other words turn your equity into cash so you can:

The Potential Disadvantages of Selling

Selling your home for the purpose of ongoing travel is not without it’s potential disadvantages. Some of the potential disadvantages to consider are i) Selling and Breaking Even OR Selling At A Loss and or ii) Loss of Home Ownership.

Selling and Breaking Even OR Selling At A Loss

Not all home sales result in a clear ‘profit’. The reality is sometimes there is not sufficient equity to make a profit. In some circumstances a property sale could result in the owner still having a debt to pay. This may not mean that you shouldn’t sell but I would very strongly encourage that you seek professional advice before making the decision to sell.

Selling to break even or at a loss in addition to the financial implications could also have an emotional or psychological impact. There could be those who even in these circumstances feel a sense of relief to no longer have a mortgage. For others it could raise negative feelings of regret and even anger of having worked hard to get ahead financially only to find they are right back where they started or worse.

Loss of Home Ownership

I put loss of home ownership as a potential disadvantage as there could be a risk that after an extended period of time travelling, when it comes time to purchase another property you could be faced with difficulties being able to afford to get back into the housing market or ability to meet lending criteria such as long term steady employment. It is for you to decide how important it will be that you are able to purchase another property in the future. This will be essential to some and not for others.

What Could Determine if You Will Make a Profit or Not

Some factors to consider when making the decision to sell and whether or not selling will make you a profit are:

Re-entering the Housing Market in the Future

There are some options you could consider as a means to help increase your odds of reentering the housing market after you travel:

Funds for Future Purchase

The idea here (assuming the sale of your home makes a profit) is to put aside a proportion of the profits for a deposit to purchase another property in the future. How much you should put aside is something only you can decide. It may help to keep in mind factors such as:

Purchase a Smaller Property

The idea here is to sell your current house and purchase another which is cheaper, possibly in your desired area so that:

These are all well and good however other things to consider are:

House Options When Travelling

RENT IT

Another option is to maintain ownership of your home and lease it generating a regular rental income.

Long Term Tenancy

Leasing your property through a tenancy agreement for a set amount each week usually for a period of 6 or 12 months is often favoured by travellers.

Overall the idea and benefits of renting out your home are:

Risks and Things to Consider:

Putting tenants in your home has potential risks which may include but not limited too:

Renting out your property even when all goes well, which can happen, is never completely a ‘set and forget’ scenario so you have to be financially and mentally prepared for this while you travel.

Holiday Letting

Holiday letting your home to guests at a nightly rate for short periods, is an option that can bring high returns, particularly in high tourist areas. Expenses are also very likely to be high. Things consider are:

Higher returns of holiday letting can be very appealing and could be the better option in your circumstances but do your research first. Positive feedback on your holiday let in these days of internet is vitally important. Our experience is feedback often centres on communication, cleanliness and value for money and to achieve excellent feedback in these areas you have to be available to manage anything that arises as they arise which means being available immediately.

The Good News: Principal Residence Capital Gains Exception

Capital gains is a tax paid when an investment property is sold. This is something that often deters travellers from renting our their home; they do not want to pay capital gains for the years their home is rented. The good news is there is an exemption that allows you to keep your home, rent it out for six years and not pay capital gains. Overall the rules are:

HOUSE SITTING

Having someone/s stay in your home for free in return for them caring for your property is another option. This may suit you if you have animals, feel there is more security in having someone in your home and financially you would not require to sell or rent your property to travel.

There are various websites providing a space to match you with house sitters. House sitters can often provide references and are often travellers themselves. That said of course it is not without its risks such as the house sitter cancelling, being unreliable or causing damage.

PROPERTY VACANT

Leaving your house vacant ie with no tenant or house sitter is an option you may consider. The obvious risks I see with this option is that a vacant property may be more prone to theft or damage. That said there is likely to be some basic things that can be done to mitigate this risk to some degree such as, hiring a gardener to mow your lawns and water your garden, installing a system that turns your lights on at night and so on. An advantage of this option is that you can return home at anytime without having to consider house sitters, tenants or holiday guests if you wanted to.

WHAT WE DID WITH OUR HOUSE & WHY

Prior to starting our life on the road we were home owners with a mortgage. We had purchased our home as a “renovators delight” a little over 10 years ago and had over the years completed the renovations; at least enough to make it liveable and usable for our family.

What did we decide to do with our family home?

Our home is rented with long term tenants.

Why Did We Choose To Rent Out Our House?

A few reasons:

Note this is a basic summary as to why keeping our home and renting it was the decision we made for us. Whatever decision you make has to be what suits you and your circumstances. It is advisable to seek professional advice from a financial advisor when making significant financial decisions. And if anyone tells you their opinion was you should or shouldn’t just smile knowingly or tell them to pull their head in.

If you are also needing some tips on how to pack up your house we have written some here. We also offer some tips on how to decide your travel budget here.

Originally written and published: 12 February 2018
Edited and republished: 12 December 2019

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