Should You Rent Out or Sell Your House?

Should You Rent Out or Sell Your House?

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

Many homeowners face this question, and the answer isn't always straightforward. Whether you're curious about the potential income from renting or concerned about the responsibilities of being a landlord, there’s a lot to consider.

Let’s walk through some key questions to help you make the best decision for your situation.

Is Your House a Good Fit for Renting?

Even if you're interested in becoming a landlord, your current house might not be ideal for renting. Perhaps you're moving far away, making ongoing maintenance a hassle, the neighborhood isn't conducive to rentals, or the house needs significant repairs before it could be rented out.

If any of this sounds familiar, selling might be your best option.

Are You Ready for the Realities of Being a Landlord?

Managing a rental property isn't just about collecting rent checks. It's a time-consuming and sometimes challenging job.

For example, you may receive calls from tenants at all hours with maintenance requests. You might also find that a tenant causes damage that you need to repair before the next lease starts. Additionally, you may have to deal with tenants falling behind on payments or breaking 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 decision that depends on your unique circumstances. Taking the time to evaluate your options will help you make the best choice for your future.

Make sure to weigh the pros and cons carefully and consult with professionals to feel supported and informed as you make your decision. That’s what we’re here for.