Many long-term travelers recommend that you sell your house before traveling so you’ll have fewer things to worry about on the road. That’s one good, reasonable option.
But like everything else in personal finance, there’s no such thing as a one-size-fits-all solution. I had to sell my apartment before traveling, but it wasn’t a clear-cut decision at all.
If you find yourself in this situation, here are some things to consider.
Sell your house and travel the world
- Peace of mind
You won’t have to worry about mortgage payments, other fees or repair issues.
- Extra cash
If you bought well, you’ll get a big chunk of cash that you can use to help fund your travels or to invest elsewhere (maybe something low maintenance like a portfolio of dividend-paying stocks or index funds).
- Monetary loss
If the market is down, you could lose money on the transaction.
- Timing and paperwork
You’ll have to either wait for the house to sell before traveling or sell it while you’re away.
I’ve done long-distance property closings and they’re usually pretty straightforward, but it can be nerve-wrecking if you’ve never done it before. The closing attorney should be able to tell you what to do. You may need to find a lawyer or a notary public at your destination to witness you signing the documents — this could be extra tricky in non-English-speaking countries.
Do you have plans to come back and live in the same area? If yes, consider how you will re-establish yourself there. Will you want to own again right away or will you be happy just renting, at least for a while immediately after your return? (Thanks to Anjanette Lugo on Twitter for reminding me of this point.)
Rent out your house and travel the world
- Passive income
You’ll earn an income as you travel. Real estate can be a great source of passive income. In my blog post How 5 Location-Independent Bloggers Afford to Travel, I featured a couple who actually lives and travels on their rent income.
There are quite a few things to consider if you want to rent out your home, but this is one huge potential upside. Depending on how much you earn in rent, you may be able to travel forever without having to work at all on the road.
If you plan on coming home after spending a certain amount of time traveling, you’ll have a place to come home to. For example, if you’re going on a year-long round-the-world trip, you can rent out the house for 1 year, get rent while you’re away and come home at the end of the trip.
Depending on your arrangement with the tenant, you could even keep many of your things in the house — this removes the need to rent or borrow storage space.
- Building rules
If you live in a building, there could be a limit on the maximum number of units that can be rented out. If it’s already at the limit, you may have to get on a waiting list before getting permission to rent out your apartment. This was the case with my apartment and one of the reasons why I sold it.
- Financial obligations
You’ll have to pay your mortgage, property tax, insurance and any building fees as you travel, so calculate whether the rent will cover all these expenses. Don’t forget to take into account repairs and maintenance costs, as well as vacancy.
- Tenant management
You’ll have to find someone to take care of the property for you, preferably an experienced property manager who comes highly recommended by other landlords. Dealing with a bad property manager can be a nightmare.
The taxman now considers this property a rental, which could mean higher property tax and higher capital gains tax when you sell.
- Emotional ties
This is your home. Will you be okay with a stranger living there, using your stuff and changing things up?
Keep your house without renting it out and travel the world
Note: this doesn’t seem very logical to me, but we don’t always make decisions based on logic, especially when it comes to sentimental things like a home.
You’ll have somewhere to come home to, even if your trip ends earlier than planned.
- No tenants
You won’t have to worry about what strangers do in your home.
- Financial obligations
You’ll still have to pay all your bills. Without rent income to help, this could get overwhelming. But if you’re financially capable of covering all home-related expenses even as you travel, why not? Automate the payments for as many bills as possible in case you end up somewhere without Internet access.
- Repairs and maintenance
You’ll have to assign someone to drop by the house regularly to check that everything is okay. You don’t want to leave a leak unrepaired for too long.
- Security issues
An empty home can become a target for vandalism and robbery.
Image: Images Money (CC BY 2.0 License).