Should You Sell Your House or Rent It Out?

When it's time to move, one of the biggest questions is: what to do with your current home? More homeowners are asking themselves this very question, especially as the idea of renting instead of selling grows in popularity. According to recent Zillow data, around 66% of sellers considered renting before listing, with 28% giving it serious thought. Back in 2021, less than half of homeowners pondered this option, showing a marked shift in today’s market.

So, should you sell your property and use the funds for a new home, or keep it as a rental to potentially build long-term wealth? Here are some key questions to help you determine what works best for you.

1. Is Your Property a Good Fit for Renting?

Not every home is ideal for the rental market. Start by assessing your property’s potential as a rental. Is it located in a desirable neighborhood for renters? Does it need a lot of repairs or updates?

If you're moving to a new area and can't be hands-on, consider how practical it would be to manage the property from a distance. Properties in high-demand rental areas or low-maintenance homes are usually better rental candidates. But if the house needs extensive repairs or is in a less popular neighborhood for renters, selling might be more sensible.

2. Are You Ready for the Responsibilities of Being a Landlord?

Renting out a home isn’t just about collecting monthly checks. Being a landlord means handling maintenance calls, repairs, and tenant issues, which can pop up at any time. Imagine fielding a call about a broken pipe at 2 a.m. or addressing structural repairs before a new tenant moves in.

There’s also the risk of tenants who may miss rent payments or even break the lease unexpectedly. As noted by Redfin, landlords need to be prepared to handle costly fixes like HVAC repairs and structural issues. Without a financial buffer for these situations, the stress (and cost) can add up quickly.

3. Do You Have a Solid Grasp on the Costs?

If the appeal of rental income is drawing you in, don’t overlook the extra expenses involved. Beyond your regular mortgage and property taxes, there are other essential costs to factor in:

• Insurance: Landlord insurance can cost about 25% more than your typical homeowner’s policy but provides the necessary coverage for tenant-related issues.

• Maintenance and Repairs: A good rule of thumb is to set aside at least 1% of the home’s value annually for upkeep, or more if the property is older.

• Vacancies: Even the best rental properties face occasional vacancies, meaning you may have periods with no rental income but the same mortgage obligations.

• Management Fees: If you want a property manager to handle the day-to-day tasks, you’ll likely pay around 10% of the monthly rent, plus additional fees for HOA if applicable.

Knowing these costs will help you calculate if the rental income will offset the expenses or if it could create financial strain instead.

So, What’s the Bottom Line?

Deciding whether to sell or rent out your home ultimately depends on your personal goals, finances, and future plans. Renting can be a way to build long-term wealth, but it’s not for everyone. On the other hand, selling gives you cash in hand, which can be invaluable for buying your next dream home.

If you're facing this decision, working with a trusted real estate professional can provide clarity. Let’s connect to discuss what might be best for you—whether you’re leaning toward becoming a landlord or ready to cash out and move forward with your next adventure.