Is It Better to Sell or Rent Out My Property?

Your housing needs and preferences are to change to suit the changes in your life cycle. If you’re currently living in a small starter home or a condominium unit, you might consider moving to a larger house as the kids grow. If you’re living in a large house now, you may want to want to downsize when the “empty nest” sets in as the children start to move out. When the need to change homes arises, one important question to address is what to do with the property when you move. Should you rent it out or does selling make more sense?

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Renting vs. Selling

Before deciding whether to take the rent or sell route, here are some factors to take into consideration:

Is your move permanent?

If you are moving away for a few years and is likely to move back, it may be cheaper to rent out your home and move back in when you return. It will save you the associated costs to sell your home (sales commission, taxes, etc) and the purchase costs of buying a new one when you come back.

What’s your home’s condition?

Renters, knowing that they’re just passing through your home, can be more willing to overlook outdated home fixtures. If you don’t have the resources for improvements before moving out, renting may be the better choice.

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Can you rent your home for enough to cover the expenses?

Renting out your home can add to your income streams. When a tenant pays the rental, you can use it to cover the monthly mortgage and other associated expenses. However, before deciding to rent your home out, you might need to study the local market conditions for rental homes. Determine if your rental property is profitable enough to cover mortgage repayments, taxes, and maintenance costs of your home.

Do you need the profit from selling your home to fund moving into your new home?

If you need to use the equity or profits from your current home as a downpayment for the purchase of your new home, it may make more sense to sell versus renting it out.

Are you ready to become a landlord?

Becoming a landlord means you are still in charge of maintenance of your house. You still need to take care of the bills when the plumbing springs a leak or the roof needs repair. If you have problems handling repairs and paying for upkeep is going to cause you to panic, it is better to sell your house. Of course, there is the option of using a property manager, but this entails additional costs for you.

Bottom line:

Renting out your home can be a good investment, but there are risks involved. If your property is bound to appreciate over time, the local market condition is attractive, and you can keep the home rented, your property can provide a return on investment. Otherwise, it may not be a great investment.