If you’ve lived in your home for some time now, but it’s time to move on. Maybe you’re moving for a job, upgrading to a bigger place, or trying to make some money from the property. No matter the reason, you’ll be in a good place: the housing market is in a solid place currently.
But how best to take advantage of the current market? You’re likely thinking, should I sell my house or rent it out? It’s a common question almost all home sellers face at some point in their lives.
It’s a big decision to make, and it’s important you understand the benefits and drawbacks of both sides of the coin. Read on, and we’ll walk you through the questions and ideas you should consider when making this important choice.
Can You Make a Profit?
Were you good at math in school? It’s okay if not, the math you’ll need to do to decide if renting or selling your home is quite simple.
The first thing you’ll want to look at in terms of your old home is its potential for cash flow. That means looking at what you can charge for rent and deducting all the expenses associated with it, like your mortgage and the cost of general upkeep.
That’s simple enough math, isn’t it? If you’re still making a profit month by month with the expenses in mind, it can be well worth renting the home. If you’re still in the red, it’s probably better to consider selling it.
Next, turn that mathematical mind towards the potential sale of your home. If you sold the house today, what would your return on investment be? Keep in mind that about ten percent of your selling price would probably be lost to various fees and financial requirements.
You’ll need to hire a realtor and so forth, and these costs need to be taken into account.
How much of a profit as compared to your initial purchase of the property? If the answer is nothing or very little, it might better to hold onto the home for a while and rent it out. You can compare the cost of both moves versus the money they’d bring in. Which option seems like it will give you a higher return?
The numbers will probably point you in the right direction.
How Much Time Do You Have?
There are many instances where it will make more sense for you to rent out your home. But you also need to take into account the responsibilities that come with being a landlord. There are more factors in play here than just the financial realities.
Renting out your home means you’ll need to maintain a relationship with the new residents of your home. You’ll need to attend to their needs, collect money from them, and repair big problems to the home that may come up during their time there. Renting out your home doesn’t have to be a ton of work, but it likely will be somewhat time-consuming.
That work will be on top of whatever is trying to take your attention to your new home as well! Make sure you have space in your life to handle both things. If renting only has a slight financial advantage, consider if that profit is worth the extra hours of work you’ll need to put into the process.
Don’t forget that being a landlord is a skill and working with tenants can be challenging. Some of them will be great to work with, while others might be challenging. Really challenging.
If you’re not ready to accept the fact that you might eventually have to evict someone from your property, you might not be cut out for the life of a landlord.
What Does the Future Look Like?
We’re not all prophets and future-tellers, but we can gaze into our imaginary crystal balls and theorize what the future might look like. What does your gut tell you is in the future for your particular home’s location?
If the future of the neighborhood looks bright, that likely means positive things for your home’s value over time. Is the city growing? Are property values around yours rising, are restaurants, schools, and coffee shops opening up?
If yes, it can be worth holding onto the home for the foreseeable future. You can make a little money through renting now, and wait for the value of your home to rise.
If the neighborhood seems like it’s going in the other direction, going south, it might be good to get rid of the property as soon as possible. That can help to avoid problems you might have to face in the future.
It might be hard to look into the future and guess what might happen. But keep a close ear to the ground as to developments in your neighborhood. If you can get even a loose sense of which way the area is going, you can have a better sense of certainty that you’re making the right decision.
Should I Sell My House Or Rent It Out?
‘Should I sell my house or rent it out?’
It’s a common question that all homeowners bump up against at some point. If you’re ready to move out of your current home, there’s a lot to consider. The above points can help put you on the right path to deciding what is right for you and your particular property.
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