Should You Sell Your House or Rent It Out?
When preparing to move, deciding what to do with your current home is one of the biggest decisions you'll face. While selling has long been the traditional choice, more homeowners today are considering turning their home into a rental property.
Recent Zillow data shows:
66% of sellers thought about renting their home before listing it.
Nearly 28% seriously considered renting it out.
This is a growing trend, up from 47% in 2021.
So how do you decide between selling or renting? Here are some key factors to weigh:
1. Is Your Home a Good Fit for Renting?
Before renting your home, assess its suitability:
Location: Is your neighborhood in demand for rentals?
Condition: Will your home need significant repairs or upgrades to attract tenants?
Proximity: If you’re moving far away, managing the property could become inconvenient and costly.
If your home doesn’t meet these criteria, selling may be the more practical option.
2. Are You Ready To Be a Landlord?
Becoming a landlord involves more than collecting rent. You’ll need to handle:
Maintenance Calls: Unexpected repairs at any time of the day.
Tenant Issues: Risks of late payments, lease violations, or property damage.
Commitment: Managing a rental property is time-intensive and requires a proactive approach to keep the property in good shape and tenants satisfied.
As Redfin highlights:
“Landlords have to fix things like broken pipes, defunct HVAC systems, and structural damage. If you don’t have a few thousand dollars on hand to take care of these repairs, you could end up in a bind.”
3. Do You Understand the Costs of Renting?
Renting out a property may sound like easy income, but there are costs to consider:
Mortgage and Property Taxes: You’re responsible for these, even if the rent doesn’t fully cover them.
Insurance: Landlord insurance costs about 25% more than standard home insurance.
Repairs and Maintenance: Plan for at least 1% of the home’s value annually, more if the property is older.
Tenant Turnover: Advertising, background checks, and cleaning between tenants can add up.
Vacancy Periods: If your property sits empty, you’ll need to cover the mortgage yourself.
Property Management Fees: Hiring a property manager typically costs 10% of monthly rent.
Making the Decision
If the idea of rental income appeals to you but the responsibilities and costs seem overwhelming, selling your home may be the simpler and more rewarding path.
Bottom Line
Choosing between selling or renting your home depends on your financial goals, lifestyle, and ability to manage the responsibilities of a rental property.
Finding ways to make your credit score better could help you get a lower mortgage rate. When you’re ready to get the process started, let’s connect.