Investment Ideas After Selling Your House

September 25th, 2023  / Author: Zachariah Peterson
Essential Guides

You sold your old home for a significant amount of cash and now you’re wondering what to do with the money you acquired. Should you invest in another home or rental property? What about a new car, a bunch of designer clothes, or travel? Possibilities are endless, and what you should do will largely depend on your financial situation.

If you have high amounts of debt to pay, doing so may be the wisest option. However, if you’re slate is clean, you can use your precedes more creatively. That said, here are some of the best investment ideas after selling your house.

Be Patient

Depending on your planning skills, a large sum of money can be either a blessing or a curse. Typically, it’s much easier to spend money than to save it. So, it would be wise to be patient and wait a bit before making any financial moves with the proceeds of your home sale. 

Sitting on large amounts of money doesn’t have to be bad - it can save you from taking unnecessary risks associated with hasty financial decisions because of greed. While considering how much you can get from an investment is vital, you should also think about the potential losses.

Reinvesting the Proceeds vs. Saving Money

Before making any financial moves, you should ask yourself whether you really want to reinvest or you’d be better off saving some money for the future. For example, if you need money obtained through the house sale for a down payment for another home, there’s no point in at looking how to invest your proceeds in stocks.

That said, your unique financial situation should give you an answer to this question. For example, if you just sold a rental home, you may not need to reinvest in some other house and can consider other potential investment alternatives. 

On the flip side, if you sold your primary house, you will have to think about reinvesting into another home. Otherwise, you’ll need to come up with a different solution to your living situation.

Questions to Consider Before Reinvesting the Proceeds After Selling a Home

As we mentioned, you will want to be patient and think your options through before making any investments with the proceeds of your home sale. That said, here are several questions to answer to gain clarity on the subject.

Do You Own a Primary Residence?

Before spending the cash you obtained from selling your home, you need to ensure you have a place to live. If you sold your primary house and want to invest the proceeds from the sale, you need to consider whether you will rent or not and how much sense doing so makes. 

Is Now a Good Time to Buy a Home?

When looking at how to invest your proceeds, you may want to consider whether you should buy a new home now or patiently wait until you find the ideal property. Another thing to consider is how long you plan to stay in your potential new house. If you want to stay there for several years, it may be a good idea to invest in a new property. Otherwise, you could end up losing money. 

Are There Rental Properties You Can Invest In?

In case you sold a rental property, you need to think about whether you could invest in some of the rental properties in your location that would yield a high return. If so, are you ready to once again commit to property maintenance? Although having a rental property can provide you with a lucrative income, it still takes work.

What Return on Investment Can You Obtain by Investing Your Proceeds Somewhere Else?

Before you allocate your proceeds into a new primary or rental home, check whether that is the highest ROI you can get. You may discover that returns are higher in the stock market. Or, you may find that paying off debt is a wiser move than investing further.

How Much Risk Are You Willing to Take?

You need to know how much risk you are willing to take and when you will need to access the money your reinvesting because this will help curb your investment strategy. For example, if you don’t plan to use those funds until you retire, you can take more risks. However, if you want to use this money in the near future, you shouldn’t risk too much as you won’t have enough time to recoup losses caused by fluctuations in the market.

Set the Money from House Sale Aside for Your Key Expenses

While it’s tempting to concentrate on your next investment, it’s important to first consider the mistakes to avoid when selling your home and costs associated with the sale of your house that will impact your net profits, such as:

  • Fees related to home sale
  • Tax consequences
  • Capital gains tax
  • Relocation expenses or costs of buying or renting a new house

Depending on the type of property and the money you make from it, the house sale may make you liable for capital gains tax. Or, it could drive you into a higher tax bracket. The proceeds from a home sale may also lead you to file estimated tax payments before your annual filing.

Once you understand your financial situation and gain more clarity into your future plans, you will have a better idea of what to do with the money made from your house sale.

What to Do with the Money After Selling Your Home?

It can be tricky to choose what to do with the money after you sell your own home. How you decide to use it will ultimately depend on your goals, but here are several ideas that may help you choose how to invest or save your proceeds.

Put the Money into a Savings Account

This low-risk alternative offers you access to money with no penalties or fees. However, if your money stays in a savings account for a longer time, you risk losing its value due to inflation. Although you will be able to access the money, you won’t be making any profit from it.

Pay Off Debts

You can also use the money you made from the home sale to pay off your debts as this will take a lot of weight off your shoulders. Paying down debts is usually beneficial because the expenses related to consumer credits surpass the risk-adjusted returns on investments. Moreover, it boosts your financial power, allowing you to take on better mortgage deals.

Fill up Your Emergency Fund

Having an emergency fund is vital in case something unexpected happens like a house repair or job loss. That said, it’s a good idea to have four to six months’ expenses in this fund, and the money earned from your house sale can be an excellent way to fill yours up.

Invest in Your New House

If you want to use the proceeds from your home sale to buy a new house, think about whether you’re planning to upsize or downsize. Also, consider all the expenses that come with the purchase.

It’s a common mistake to look only at how much the house costs, forgetting about other costs that can impact your financial situation. For instance, if you upsize, you’ll also have higher taxes, insurance, and utility bills compared to your past expenses.

While you may sell your house for a high price, you may also need to buy a new house at a high price. And if the market shifts, that house may have a lower value in the coming years. 

Invest in a Rental Property

Investing in a rental property can be an excellent way to produce income. This way, you can make monthly profits by renting and selling it in the future for higher profits. However, for this to happen, the housing trend needs to continue.

You can make money if you invest in several rental properties by investing in one home and then using the equity from that house to invest in a couple of other houses. Once you have a portfolio of homes and can manage them, your profits will reach the top.

However, if the housing market changes, the money you earn from your multiple properties could reduce below what you paid for them and spend on maintenance.

Invest in Mutual Funds

If you invest in mutual funds, the money you give will be used for buying stocks and bonds chosen by a mutual fund company. The advantage of this approach is that everything is done by professionals, making it safer than regular stock buying where you likely don’t have enough skills to trade. Nevertheless, mutual funds can take years to generate considerable profits so they may not be a good choice if you need fast returns.

Invest in Experiences and Skills

Why not use the money you earned from the home sale for unforgettable experiences or skills that may help you generate profits in the future? While clothes and electronics may boost your dopamine levels at the moment, they will lose their value over time. However, there are some things that hold their value forever like:

  • Education: You can learn a new skill, language, or instrument that can help you advance in your career.
  • Travel: Memories can last a lifetime, and what better way to create a new memory than to travel to a country you’ve never seen before and enjoy its culture, food, and nature with the people you love?
  • Experiences: Seeing your favorite band live or going parachuting can make you more fulfilled than a bunch of new clothes.

Invest Your Money Wisely

After reading this article, you have several investment ideas after selling your house you can use to your advantage. Before making any financial moves, make sure to understand your current financial situation and short-term and long-term goals. This will give you a better understanding of what you should do with money from the sale of your old home.

If you haven’t sold your home yet, consider selling it to SleeveUp Homes. We’ll buy your home as-is for top dollar, meaning you won’t have to make any repairs. You'll also skip all the trouble associated with the long home-selling process, such as listing your home on the market, hiring a real estate agent, making costly renovations, finding all the documents required to sell a property, and the list goes on. 

To see how much you can get for your property, request a no-obligation cash offer and make your decision.



If you want to sell fast and are worried about how long the traditional process takes, and the commission and fees involved, consider working with SleeveUp Homes.