CategoriesReal Estate July 31, 2024 By

Should You Rent Out or Sell Your House?

When you’re ready to move, figuring out what to do with your house 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 worried about the responsibilities of being a landlord, there’s much 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. Maybe you’re moving far away, so keeping up with the ongoing maintenance would be a hassle; the neighborhood isn’t great for rentals, or the house needs significant repairs before you can rent it out.

If any of this might apply, 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 of the day with maintenance requests. You may also find a tenant causing damage you have to repair before the next lease starts. You may even deal with people falling behind on payments or breaking their lease early.

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 them all.
  • Insurance: Landlord insurance costs about 25% more than regular home insurance, and covering damages and injuries is necessary.
  • Maintenance and Repairs: Plan to spend at least 1% of the home’s value annually on maintenance and repairs, more if the home is older.
  • Finding a Tenant involves advertising costs and 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. If applicable, HOA fees are an additional cost.

Bottom Line

To sum it all up, selling or renting out your home is a personal decision that depends on your circumstances. Whatever you decide, evaluating 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 decide. That’s what we’re here for.

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