Should You Rent Out or Sell Your House?

Deciding what to do with your house when you’re ready to move can be a significant decision. Should you sell your home to fund your next adventure, or keep it as a rental property to build long-term wealth?

This is a common dilemma for homeowners, and the answer isn’t always clear-cut. Whether you’re exploring the potential rental income or concerned about the challenges of being a landlord, there’s a lot to consider.

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

Is Your House a Good Fit for Renting?

Evaluate if your home is suitable for renting. Consider factors like distance, neighborhood desirability, and the need for repairs. If maintaining the property from afar or addressing significant repairs is impractical, selling might be the better 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 get calls from tenants at all hours of the day with maintenance requests. Or you may find a tenant causes damage you have to repair before the next lease starts. You may even have to 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?

Generating extra income through renting involves additional costs. Mortgage payments, property taxes, landlord insurance, maintenance, tenant acquisition, vacancies, and management fees must all be considered. Ensure you’re prepared for these expenses to avoid financial strain.

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

Deciding to sell or rent out your home is a personal decision that hinges on your unique circumstances. Carefully weigh the pros and cons, and consult with professionals to make an informed choice that aligns with your future goals. Taking the time to evaluate your options will help you make the best decision for your situation.