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      Multiplying Your Pot of Gold: How To Buy & Sell Your Home Simultaneously

      BOS Zakim GreenHappy St. Patrick's Day, Boston!

      The day of green stuff, leprechauns, and everything Irish is again upon us - prompting us to take a look at how people can earn their own pots of gold in terms of property investments. But how do you actually achieve a steady balance between the few golden coins you have, and the desire to turn them into stellar property investments especially in a seller's market like we're currently experiencing? Read on and find out.

      Let's say your current pot of gold is your home right now - how do you exactly turn that into a better investment without taking on too much financial risk? Given that buying a home in itself is already such a big decision, buying one when you already own is even trickier. But be not afraid, we're dishing out three proven ways you can buy and sell your home at the same time without too much risk. Hopefully these tips will help you enlarge your 'pot of gold' into a cauldron of investment properties.

      Sell First, Then Buy

      This is perhaps the safest plan, but it calls for multiple moves. In this scenario, you list your home and complete the transaction before purchasing another home. When you sell your home, you put the bulk of your belongings in storage and live in a temporary rental or, if possible, enter into a rent-back deal with your home's new owner. The advantage of this method is that you know exactly how much you can spend on a new home, and you don't have to worry about temporary financing. Also, without another home waiting in the wings, you'll be less tempted to drop the price or to take the first offer that is below the asking price. The disadvantage is that it is a disruptive experience, and you could be displaced for a while if you are home-shopping for a long time.

      Buy First, Then Sell

      This strategy minimizes disruption. You can move into your new place at your leisure and then take time to prepare your home for sale. The major disadvantage is that, depending on how fast your old home sells, you could be shouldering the burden of two mortgages for some time. You are also responsible for maintenance and security on the vacant home. This scenario works best if your first home is already paid off.

      A variation of this plan is to buy a new home with the plan to rent out the old one for a year. This buys you some time with money coming in, but being a landlord comes with its own stresses and responsibilities. You may also need to repair or renovate the home after it has served as a rental.

      Buy and Sell Simultaneously

      To execute this plan, you need to prepare for all contingencies and to know that if your timing is off, you will face one of the two scenarios listed above. The trickiest bit can be timing the financial burden. One option is bridge financing. This enables you to own two homes for a short amount of time. To do this, you need to either borrow money from family or obtain a short-term loan from a bank or other lending institution to span the time period between when you close on your new home and sell your old one. In essence, you are getting a short-term home-equity loan (also known as a Home Equity Line of Credit) on your present house and using it as a down payment on your new house. You then repay the loan when you sell your first home. Traditionally, it is not easy to qualify for a conventional bridge loan, since you have to demonstrate that you have enough money to pay for both mortgages for an indefinite period of time - but more recently, lenders have eased up given the current market conditions. Experts advise applying for the Home Equity Line of Credit well before you buy a new house, that way most of the credit on the line is unused until you actually need it.

      Try to schedule the closing date on the sale of your old home after the closing date on the home you buy. This way, you can stay in your present home until you move into your new home. Otherwise, you can attempt to negotiate a rent-back arrangement with the buyers.

      Keep in mind that these tips will help you navigate the "buy and sell at the same time" process, but essentially there is no right answer in choosing any of these scenarios as it all depends on your financial stability and tolerance for risk.

      Still confused? Let us guide you thorough it! Contact us now and we'll advise you on how you can best buy and sell at the same time. Our knowledge of the local market, as well as our long list of partner financial advisors can get you that deal that no other leprechaun could, guaranteed.

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