Been unsure about whether to your house now or wait? Trying to decide if it’s the right time? Hopefully this article will help you determine if it’s the right time for you to sell your Maui home!
What is the property doing for you?
Hopefully your house is accomplishing one of these things:
- It’s your primary residence and has everything your family needs in a home.
- You rent it out and have great tenants, and you earn positive monthly cash flow after paying all of the expenses.
- You use it as a vacation home when you need to get away.
If the house is vacant or always needing repairs or tenants always moving in and out resulting in you losing money, you should probably consider selling it!
Could another house meet your needs better?
Investors call this situation “Opportunity Cost.” If you have a rental that loses money or breaks even, or even if it cash flows, but not much, that property is preventing you from buying another property that could produce income for you – it’s an opportunity cost because you lose the opportunity to earn that income since your money is tied up in this property. Look to see what’s available and determine if you could do better by selling to trade up to a better house.
Is it “too much house?”
Usually when we buy a house, we buy the right amount of home for what we need at the time of purchase. A big family might need 5 bedrooms. But 10 or 15 years later you might not need all of that space. Maintaining a big house is a ton of work, and if this is you then you probably already know this feeling all too well. Sometimes downsizing, especially with the cost of houses in Hawaii, can be such a burden off your shoulders.
Or is your growing family cramped into a small house?
Alternatively, young families tend to grow out of their starter homes. As families have more kids, accumulate more belongings, and advance in their careers, they usually need to upgrade. Having the space to store your items and let everyone have their own personal space and privacy is priceless.
Is this house perfect for you for forever?
Is this your forever home? If you know an upgrade or downgrade is coming soon, consider getting ahead of the curve and making the change before you desperately need it. Your future self will thank you. Especially if home prices and interest rates keep rising. In 2021 so many families told me that they were waiting for prices to drop so they could purchase a home, and I tried to explain that the interest rate is just as important as the price and they should not wait to buy their house on Maui. Unfortunately now they are seeing just what I meant, since the monthly mortgage expense to own a house in Hawaii has increased over 50% in 9 months. Today the house they wanted is even more expensive, and much farther out of reach because even if they could get it for the same price it was a year ago, the interest rates have increased the monthly payments on that home drastically.
Does your house need upgrades or repairs?
Maui has a lot of older homes. Maybe not as old as some places, but it seems like the average house in Hawaii was built in the 1960-1970s. Which means unless you have completely gutted the house and upgraded everything, the house is probably looking pretty dated and starting to have things break regularly. If you have the experience or time and money to do a full renovation then you may want to consider this option. Otherwise, most people find they are better off taking the tax benefits of owning a house and depreciation, and buying a new construction home on Maui. The good news is there are options out there for selling a house that needs updates or even major repairs. Consider finding a reputable direct buyer such as Maui Home Buyers, who will buy your Maui house as-is. We handle it all, including the house’s repairs, and you don’t have to worry about us backing out halfway through the sale because some problems came up during an inspection. Fixing those problems is our job!
Is there equity in your home?
How much do you owe on the mortgage and what’s the current market value of your house in Hawaii? Could you sell your house, pay off your mortgage, and still have cash left to put down on a new property? Then you should seriously consider selling! We call this “return on equity”. When you own a home that has equity, and you’re not putting that equity to use then you are not getting any return on your equity. You should either take out a home equity line of credit (heloc) to renovate the house to increase it’s value or invest into something that will make you a positive return, or you should sell and cash out that equity to invest it into another property that will accumulate more equity. If you can get 20% down towards your next house that’s great! If you want to know the current value of your home, call us for a free CMA, comparable market analysis, on your house or condo. (808) 359-3121
How much is owning your Maui house actually costing you?
How much money are you making or losing every month as a result of owning this house? Of course if you live in the home then you’re probably not making anything from it; but you can still compare how much your house costs each month to what it would cost to rent a similar house on Maui. If renting is cheaper then it’s a no-brainer. The costs of home ownership go well beyond a mortgage payment. Make sure you factor other expenses on the house, like taxes, insurance, maintenance, and cap-ex. Cap-ex is short for capital expenditures and refers to the large repairs every home needs on a less frequent basis, such as a new roof, re-paving the driveway, new plumbing or electrical, new paint, new AC, and so on. If one of this things is nearing the end of it’s lifespan then it can be a big expense. But if 2 or 3, or even more of them are on their last legs than you should seriously consider selling to someone that is comfortable buying your house as is, and can pay cash (so they won’t need a bank to say the house is in acceptable condition to approve it for financing).
If you’re considering selling that usually means the time has come. We can’t give one answer that will apply to everyone, but hopefully we’ve given you a lot to consider, and after reading this article the right choice is clear to you. We are always available and happy to help answer any questions you have about this process!