Should You Rent Out or Sell Your House?
Deciding what to do with your house when you're ready to move is significant. Should you sell it and use the money for your next adventure, or keep it as a rental to build long-term wealth?
It's a common dilemma for homeowners, and the answer can sometimes be unclear. Whether you're curious about the potential income from renting or concerned about the responsibilities of being a landlord, there's much to consider.
Here are some key questions to help guide your decision:
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. You may be moving far away, making maintenance a hassle, the neighborhood could be better for rentals, or the house needs significant repairs before renting out. If any of these apply, selling might be your best option.
Are You Ready for the Realities of Being a Landlord?
Managing a rental property is about more than just collecting rent checks. It's a time-consuming and sometimes challenging job. You might get calls from tenants at all hours with maintenance requests or deal with tenants who damage the property or fall behind on rent. 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. Selling your home is a better financial decision and less stressful.
Do You Understand the Costs?
If you're considering renting out your home primarily to generate extra income, remember there are additional costs. According to Bankrate:
Mortgage and Property Taxes:
You must still pay these expenses, even if the rent doesn't cover them.
Insurance:
Landlord insurance costs about 25% more than regular home insurance and is necessary to cover damages and injuries.
Maintenance and Repairs:
Plan to spend at least 1% of the home's value annually on maintenance and repairs, more if the house 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 a percentage of the rent. HOA fees are additional if applicable.
Bottom Line
Selling or renting out your home is a personal decision that depends on your circumstances. Taking the time to evaluate your options will help you make the best choice for your future. Consider the pros and cons carefully and consult a professional to feel supported and informed. That's what I'm here for—feel free to reach out with any questions!