Should You Rent Out or Sell Your House?

Should You Rent Out or Sell Your House?

Deciding what to do with your house when you're ready to move can be a major decision. Should you sell and use the proceeds for your next venture, or keep it as a rental to build long-term wealth?

Many homeowners grapple with this question, and there's no one-size-fits-all answer. You might be interested in the potential income from renting but also concerned about the responsibilities of being a landlord. There’s a lot to consider.

Let's explore some key questions to help you determine the best choice for your situation.

Is Your House a Good Fit for Renting?

Even if you're considering becoming a landlord, your current house might not be the best choice for renting. Perhaps you're relocating far away, making it difficult to manage maintenance, or the neighborhood isn't well-suited for rentals. Alternatively, the house might need substantial repairs before it can be rented out.

If any of these situations resonate, selling might be the better option.

Are You Ready for the Realities of Being a Landlord?

Managing a rental property involves more than just collecting rent checks; it's a time-consuming and sometimes challenging responsibility.

For instance, tenants may contact you at any time with maintenance issues, or a tenant might cause damage that needs to be repaired before the next lease begins. You could also face situations where tenants fall behind on payments or break their lease early. As Investopedia highlights:

"It isn’t difficult to find horror stories of landlords troubled with more headaches than profits. Before deciding to rent, consider talking to other landlords and doing a detailed cost analysis. You might find that selling your home is a better financial decision and less stressful.”

Do You Have a Good Understanding of What It’ll Cost?

If you're thinking about renting out your home primarily to generate extra income, remember that there are additional costs you’ll want to plan for. As an article from Bankrate explains:

• Mortgage and Property Taxes: You still need to pay these expenses, even if the rent doesn't cover all of it.
• Insurance: Landlord insurance costs about 25% more than regular home insurance, and it's necessary to cover damages and injuries.
• Maintenance and Repairs: Plan to spend at least 1% of the home's value annually, more if the home is older.
• Finding a Tenant: This involves advertising costs and potentially paying for background checks.
• Vacancies: If the property sits empty between tenants, you'll lose rental income.
• Management and HOA Fees: A property manager can ease the burden, but typically charges about 10% of the rent. HOA fees are an additional cost too, if applicable.

Bottom Line

To sum it all up, deciding whether to sell or rent out your home is a personal choice that depends on your unique circumstances. Taking the time to evaluate your options will help you make the best decision for your future.

Be sure to weigh the pros and cons carefully, and consult with professionals to ensure you feel supported and informed throughout the process. That's what we're here for.