This post is the first in a short series exploring common barriers to longer term travel. For many people, the first barrier is their house. Owning a house ties up significant money, time and energy. Can you let it sit empty? Do you need to sell it to travel? Are you comfortable with renting it? And how attached are you to your house? This last question explores the notion of “is it your house or is it your home?” I believe that a house is a house but a home is where you choose to make it. A home can be anything and anywhere -- a tent, an RV, a flat, a cabin, even a hostel. Once you’ve made this shift in belief, you’re part way to overcoming this barrier. In this post, I’ll outline some options on what to do with your house.
For us homeowners, the first thing we have to decide is: do we keep the house or sell it? There are a few factors in this decision, the first being do you need the capital to fund your travel? What type of travel will you be doing? Driving around North America in a big RV or flying overseas to live in a foreign city? Purchasing a big travel trailer and tow vehicle is a large capital expenditure that will probably require the sale of your house. But what if you took a more modest route with your existing SUV and a large tent? It may not be as luxurious as a fifth wheel but still totally doable. Overseas travel is often pre-judged as being the most expensive travel but that is not always necessarily true. Sure, the initial sunk cost of the flights can be a few thousand dollars, but once you’ve arrived, your monthly living expenses can actually be significantly less than where you came from. Add in a source of portable income and you won’t need that lump sum of equity from a house sale.
Generally, I would not recommend selling your house to finance travel. You’ve got a vested interest in that property: you’ve already qualified for the mortgage and overcome several substantial hurdles (time, energy and financial) to purchase the house. I’d prefer to rent that property and continue to build equity. For a lot of us, it takes some work on our mindset to relinquish control of our house to a tenant or a property manager. This is where we have to distinguish whether we view the house as a home or as an income-producing asset. Depending on your local rental market, your mortgage, and your costs, hopefully you’ll have a positive cash flow of a few hundred dollars to add to your monthly income. But before you put up a For Rent sign, take the time to educate yourself on what it takes to be a landlord, because it’s not for everybody.
Many people won’t hesitate to tell you a horror story about a bad tenant. Don’t take advice from these people. They mean well but they are not helping you. Find someone in your area who’s been in the game for while and who will share the good and the bad with you. A professional, experienced real estate investor will give you the intel, straight up, and what strategies they use to minimize risk.
A couple of other non-income producing options for keeping your house include a house-swap or finding a housesitter. A house-swap is essentially exchanging houses (and sometimes jobs too, in the case of teachers) for a set period of time. Good housesitters are easy to find on the large online housesitting sites. In most cases, you pay the bills and the housesitter takes care of the house for you. Many people are making a career out of housesitting so you should have no trouble finding a qualified person or couple, especially if you live in a desirable location.
Owning a house needn’t stop us from living our travel dreams. We just need to look at our options, do our homework, and decide which one is right for us.
For reference and further reading:
www.reincanada.com - Canadian resource center for real estate investors.
www.trustedhousesitters.com - Worldwide housesitting website.
Rich Dad, Poor Dad by Robert Kiyosaki - Classic read about personal finance, cashflow and real estate.