Should You Sell Your House or Rent It Out? A Comprehensive Guide

When it’s time to move, one of the most significant decisions you’ll face is whether to sell your current home or rent it out. With many homeowners considering the rental route, it’s clear this question is more relevant than ever. In fact, Zillow reports that two-thirds (66%) of sellers now think about renting their home before listing it, a notable increase from 47% in 2021.

If you’re asking yourself whether to sell or rent, this guide will walk you through key considerations to help you make the best decision for your financial and lifestyle goals.

1. Is Your House a Good Candidate for Renting?

Not every home is suitable as a rental property. Before committing to renting out your house, ask yourself these questions:

• Location: Is your neighborhood in demand for renters? Properties near schools, workplaces, or public transit tend to attract tenants more easily.

• Condition: Does your house require major repairs or updates? Rental properties should be move-in ready to attract reliable tenants.

• Proximity: Are you moving far away? Long-distance property management can be difficult without hiring a professional property manager.

If your home’s location or condition doesn’t make it appealing to tenants, selling might be a more practical choice.

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

Becoming a landlord is more than collecting monthly rent—it’s a serious commitment that requires time, effort, and financial readiness.

As a landlord, you may face:

• Unexpected Maintenance Issues: From broken pipes to malfunctioning HVAC systems, you’ll need to address repairs promptly.

• Tenant Challenges: Late rent payments, lease violations, or property damage are common issues landlords encounter.

• Ongoing Communication: Tenants may contact you at inconvenient times with urgent needs or questions.

Redfin highlights the financial reality of being a landlord:

“Landlords have to fix things like broken pipes, defunct HVAC systems, and structural damage, among other essential repairs. If you don't have a few thousand dollars on hand to take care of these repairs, you could end up in a bind.”

If the demands of property management seem overwhelming, selling your home may be the better route.

3. Do You Fully Understand the Costs of Renting?

While renting can generate passive income, it also comes with significant costs. Consider these common expenses:

• Mortgage and Property Taxes: If rental income doesn’t cover these expenses, you’ll need to make up the difference.

• Insurance: Landlord insurance, which is 25% more expensive than homeowner’s insurance, is necessary to protect against damages and liabilities.

• Repairs and Maintenance: Plan for annual maintenance costs of at least 1% of your home’s value, and more for older homes.

• Tenant Turnover Costs: Finding new tenants involves advertising, background checks, and potential vacancy periods where you’ll need to cover the mortgage.

• Property Management Fees: Hiring a property manager can ease your workload but typically costs around 10% of the monthly rent.

• HOA Fees: If your home is in an HOA community, you’ll need to budget for these as well.

Without careful financial planning, renting may not be as profitable as it seems.

4. Does Selling Make More Sense for Your Situation?

Selling your home can offer immediate financial benefits, such as:

• Equity Access: You can use the proceeds from the sale to purchase your next home or invest in other opportunities.

• Less Responsibility: Selling eliminates the ongoing tasks and expenses associated with being a landlord.

• Tax Advantages: Depending on your situation, you may qualify for tax exemptions on the profit from your home sale.

If you’d prefer the simplicity of a clean break and immediate funds, selling might be your best option.

Bottom Line

Deciding whether to sell or rent your house depends on your financial situation, lifestyle goals, and readiness to manage a rental property. If you’re unsure which path to take, consulting with a local real estate expert can provide clarity. Let’s connect today to explore your options and make an informed decision that aligns with your goals.