Should You Sell Your Home or Rent It Out? Here’s How to Decide
When it’s time to move, deciding what to do with your current home is a major choice. More homeowners today are weighing the option of renting out their property instead of selling it.
According to recent data from Zillow, two-thirds (66%) of sellers considered renting their home before listing, and nearly a third (28%) gave it serious thought. This is a notable increase from 2021, when fewer than half (47%) of homeowners explored renting as an option.
So, should you sell your home and use the proceeds for your next one, or keep it as a rental to build long-term wealth? Let’s break it down with a few key questions to help you decide which path aligns best with your goals.
Is Your Home a Good Candidate for Renting?
Before committing to renting, evaluate if your property is truly rental-ready. Here are some factors to consider:
- Proximity to Your New Location: If you’re moving far away, managing the property could become a logistical headache.
- Neighborhood Appeal: Is the area desirable for renters? Proximity to schools, shopping, or public transportation could make a difference.
- Condition of the Home: Will you need to invest in repairs or updates before welcoming tenants?
If managing the property feels overwhelming or the home requires significant work, selling might be the better choice.
Are You Prepared for the Challenges of Being a Landlord?
Owning a rental property involves more than collecting monthly rent—it’s a hands-on commitment.
- Maintenance Calls: Be ready for late-night calls about broken appliances or urgent repairs.
- Unexpected Expenses: You’ll need funds for maintenance, repairs, and potential vacancies.
- Tenant Issues: Late rent payments, lease violations, or property damage can lead to stress and added costs.
As Redfin explains:
“Landlords have to fix things like broken pipes, defunct HVAC systems, and structural damage, among other essential repairs. If you don’t have a few thousand dollars on hand to take care of these repairs, you could end up in a bind.”
Do You Fully Understand the Costs of Renting?
While renting might seem like an easy way to generate income, there are additional expenses to account for:
- Mortgage and Property Taxes: These don’t go away, even if the rent doesn’t fully cover them.
- Landlord Insurance: This can cost about 25% more than standard home insurance.
- Maintenance and Repairs: Expect to budget at least 1% of the home’s value annually, or more for older properties.
- Tenant Turnover Costs: Advertising, background checks, and potential income gaps during vacancies add to the expense.
- Property Management Fees: If you hire a manager, they typically charge around 10% of the monthly rent.
The Bottom Line
Deciding whether to sell or rent out your home depends on your financial situation, lifestyle, and goals. Both options come with potential rewards and challenges.
Let’s connect to explore your options together. With a professional by your side, you can make a well-informed decision that feels right for your future.
