Should I Sell My Home or Rent It Out?
Each year, an estimated 40 million Americans move. Most move to a different neighborhood or city, while others move to a whole new state. What do you do if you’re one of these movers and you own your current home?
Owning a home and needing or deciding to move can present a pretty big dilemma. What should you do with the house? Should you look for buyers or renters?
If you’re wondering, “Should I sell my home or rent it out?” you’re not alone. Many homeowners in your position have no clue which one will be better, especially when both options seem lucrative–and difficult.
To help you decide whether or not to sell your home or rent it out, we’re going to take a closer look at the signs that one choice may be better than the other. Keep reading to find out more.
Table of Contents
Signs That You Should Sell Your Home
First, let’s talk about signs that you should sell a home, rather than renting it out. Note that selling a home doesn’t have to take a ton of time when you work with companies that advertise that we buy homes. If time or effort is your concern, you don’t have to go the traditional route.
It’s a Seller’s Market
You may have noticed that since late 2020, we’ve been in a steady seller’s market. This occurs when there aren’t a ton of homes for sale but there are a ton of buyers looking for a home, which can lead to competitive offers that benefit the seller. If you want to see a strong ROI on your initial home purchase, sell during a seller’s market.
You Can’t Charge Enough Rent to Align With the Home’s Value
Unlike selling a home, you can’t always rent out a home at a price that aligns with the home’s value. Remember, when you rent out a home, you’ll still have plenty of expenses like property tax, maintenance, and mortgage payments. If you can’t charge a high enough rent to cover these expenses, it’s not worth it.
You Need Liquid Assets
Maybe you need cash right away to cover your cost of living or to invest in something new, like buying a house in a new location. Renting can generate a steady income but of course, you’ll get smaller amounts of money at a time. If you need a large chunk of cash in the immediate future, selling is the better course of action.
You Don’t Want to Deal With Tenants
Not everyone wants to become a landlord. Even if you do have help managing your property, you may not want to take on the risk of having your property devalued by bad tenants or pay for maintenance costs over time. There’s nothing wrong with only wanting to manage your own household.
Signs That You Should Rent Your Home Out
There are signs that you can and should rent a home out, rather than trying to sell it. If you want to make passive income, you can always partner up with property management companies that can take care of the heavy lifting. Otherwise, expect your rental property to function as a job.
It’s a Buyer’s Market
A buyer’s market is, as you would expect, the opposite of a seller’s market. During a buyer’s market, there are a ton of houses up for sale and not as many buyers looking, which means that the competition tips in the buyer’s favor. Rent out your house in a buyer’s market and sell later, when the market will work in your favor.
You Want to Add a Rental Property to Your Assets
Many people enjoy owning multiple properties and consider them assets. You may feel strongly that you can turn a profit by charging rent or that this property will continue to appreciate in value. If that’s the case, it makes good financial sense to hang onto the property and keep milking it to grow your wealth.
You Want to Move Back In Later
One of the biggest reasons why people rent out their homes rather than sell is because they want to move back in later. If you know that you will be moving back to the area in a few short years, it does make sense to find a renter to take over for that amount of time. If you’re not sure exactly when you’re moving back, be sure to build that into the lease so that the renter is guaranteed to move out when you’re ready to move in.
Your Neighborhood Has a High Demand for Rentals
Even in a seller’s market, you may find that it makes good economic sense to rent out your home. In fact, seller’s markets do often create a high demand for rental properties because the supply to buy is so low. If your neighborhood has a high demand for rentals (and, furthermore, a competitive demand that will allow you to charge a good amount of rent), you may decide that renting is worth the effort for a few years.
Should I Sell My Home or Rent it Out? The Choice Is Yours
What happens when a homeowner finds out or decides that it’s time to move? They probably ask themselves, “Should I sell my home or rent it out?” We hope that our guide will make it easier for you to find the answer to that question based on your needs, desires, and the state of the housing market.
Looking for more content that will help in a pinch? Take a look around for everything from guides to the latest trends in tech to house buying tips and beyond.
