Selling Your Home vs. Renting it Out: How to Know What’s Best

Deciding between selling or renting out a house is a significant financial choice that many homeowners face, and it can be a struggle to determine the best course of action. The considerations involved can be complex, often coming down to each individual’s unique situation and broader market conditions. Understanding these factors and how they align with your goals is essential when choosing to sell or rent out your home. So, where should you start?

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

How To Decide if Selling or Renting Out is Best

• Start by evaluating your current financial needs and long-term goals.
• Consider local rental demand and housing market trends.
• Assess your willingness and ability to be a landlord.
• Compare potential rental income to selling profits.
• Factor in property appreciation potential and investment goals.

Signs You Should Sell Your House

A seller’s market, your unwillingness or inability to become a landlord, or the immediate need for funds to purchase your next home can indicate it’s a good time to sell your home rather than renting it out. Whether you work with an investor or a real estate agent, see if selling is the right move.

Seller’s Market

Amid a booming housing market, it’s important to recognize the signs that indicate it’s time to sell your house to maximize your financial gains. In a seller’s market, where low housing inventory and strong buyer demand dominate, selling your property can yield substantial profits. This market condition has the potential for multiple offers, bidding wars, and higher sale prices.

Monitoring local real estate statistics can also provide insights into the current state of the market and guide your decision-making process.

You’re Not Ready to Be a Landlord

Being a landlord requires time, effort, and expertise. If the thought of dealing with tenant issues, maintenance requests, and property management responsibilities causes anxiety or stress, it might mean you’re not ready to be a landlord.

Lacking the necessary knowledge of landlord-tenant laws, rental market trends, or financial management skills could further reinforce the idea that selling your house is a better option. Even if you’d rather hire a property manager, that’s still an extra cost to think about.

Need the Money to Buy Your Next Home

By selling your current house, you can free up the necessary funds to facilitate the purchase of your next property without overextending yourself financially. In this situation, selling to a cash home buyer may be the best move. With a cash offer, you can enjoy the benefits of a faster transaction and spend even less time stressing about how you’ll be able to pay for your new home.

Selling your house to finance your new home also eliminates the need to juggle extra costs that would arise if you rented out your home. If acquiring funds for your next home is your top priority, selling your house may be the most suitable option to meet your financial needs.

Signs You Should Rent Out Your House

If you’re leaning toward renting out your house rather than selling it, look for signs that may point you in that direction: high rental demand in the area, a desire for additional income streams, and the expectation of property appreciation over time.

High Rental Demand

High rental demand is a key indicator that it might be a good time to rent out your property. If you find a strong demand for rentals in your area, with many people looking for housing, this could be a sign that renting out your house could be a profitable venture. High rental demand often translates to quicker occupancy, fewer vacancies, and potentially higher rental rates.

Keeping an eye on rental market trends and demand in your area can help you make an informed decision about whether to rent out your house.

You Want the Extra Income

Renting out your home may allow you to benefit from a steady stream of rental income, which can help cover mortgage payments, property taxes, and other expenses associated with homeownership. This extra income can also provide financial stability and potentially help you save for future investments or unexpected expenses.

Moreover, renting out your house can be a practical way to make the most of your real estate investment while retaining ownership of the property. By becoming a landlord, you have the opportunity to earn passive income and build equity in your home over time.

If you’re open to managing a rental property (or hiring someone to handle those duties for you), renting out your house could be a viable option to boost your income and maximize the potential of your asset.

You Expect the Home to Appreciate

Renting out your house can be a smart decision if you believe your area’s real estate market is poised for growth. If and when you decide to sell down the road, you could earn a bigger profit on top of the rental income you’ve generated.

By renting out your house instead of selling it, you can continue to build equity in the property while earning rental income. Keep in mind that property appreciation is never guaranteed, but if you have confidence in your property’s potential to increase in value, renting it out could be a good choice.

Even renting out for a year or two could put you in a better financial position. If you sell after a year or less, you’ll likely take a loss due to the costs involved in selling a home. An extra year of mortgage payments can give you enough equity to cover the fees.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.