FREE ONLINE CLASS
Learn How To Start Investing In Real Estate
FREE ONLINE CLASS
Learn How To Start Investing In Real Estate

Should I Sell Or Rent My House? Expert Tips For Homeowners

Written by Than Merrill

Whether you are moving because of a new job or you’re just wanting to move to a new place, you might be wondering, “should I sell or rent my house?” It can be a difficult decision for homeowners, and each has its pros and cons.

This guide can help you determine which one might be the best solution for you. Looking at the factors that go into such an important decision can help you determine which solution might be best for you.

Should I Sell Or Rent My House?

This decision should not be taken lightly as it can completely change your financial situation. Selling can give you cash now, but renting allows you to build more equity into the home and you will see that the home value will increase as you’re earning income through the tenants you have rented the house to.

Here are some scenarios to consider before deciding whether to rent or sell.


[ Rental property investor, rehabber or wholesaler? Get to know which investing strategy is the best fit for YOU by attending our FREE online real estate class. ]


should i sell or rent my house

When To Sell Your House

Think you might want to sell your house? If you fall into one of these scenarios, selling might be better than renting.

  • You need cash to pay for the next house. You might not be in a position to buy a new house with your current finances. In this case, you will need to sell the first home and then use the proceeds to put a down payment on the new home.

  • You don’t want to be a landlord. Being a landlord comes with a lot of work and responsibility. You might not be in a position in life to be on call for tenants. In this case, selling might be better, so you don’t need to worry about home repairs and finding contractors when something goes wrong with the house being rented.

  • You are eligible for capital gains tax exemptions. If you sell your home, you might be eligible to exclude $250,000 of capital gains from the sale from your taxes. If you plan to do this, you need to prove that the house was your primary residence for the last two out of five years.

When To Rent Your House

If none of the above applies to you, you might wonder whether renting is a better option. Here are some scenarios where renting is a better idea.

  • You need the rental income. The extra income from renting can really help your finances. If you are buying a new home with a mortgage though, lenders will consider your rental income when they are helping you find financing. Usually, only 75% of your rental income can be considered real income for a mortgage.

  • Home values are going up in the area. If home prices tend to be increasing in the area where your home is, you might want to consider renting and then selling later when the home prices are at their highest. Ideally, appreciation should only take a few years as you don’t want to hang on to a house for renting purposes for decades.

  • Your move is temporary. If you only want to move for a few years and then plan to return to your current city, renting might be better. This gives you more security as you can move back into your old house once you move back into the area.

Costs Of Renting Vs. Selling Your House

Both renting and selling homes come with costs. You need to consider whether your rental income will cover mortgage costs and the upkeep of both houses. You should look at similar properties in the area and see how much they charge for rent, and this can give you an idea of how much you can charge monthly.

You also need to consider the costs of renting, including maintenance, repairs, hiring a property manager, and taxes.

Costs Of Renting Out A House

Here are some common costs when it comes to renting out a house that you want to keep in mind:

  • Mortgage: You will need to pay the mortgage on your rental home and the mortgage on a new home. Make sure your rental income covers the mortgage of the rental home.

  • Property taxes: Property taxes will generally rise as your home’s value rises. You need to be prepared to pay for them.

  • Home repairs: To keep tenants happy, you need to be able to pay for repairs as soon as they arise. Try and budget 1% of the home’s value for repairs.

  • Finding tenants: You need to find a way to get the word out on your rental properties. Taking out advertisements costs money. You also need to be able to pay for credit and background checks.

  • Property management fees: Companies tend to charge 10% of the rent price for this.

  • Tax filing and accounting fees: You will need to be able to pay for the cost of filing taxes and for hiring an accountant if you need one.

  • HOA fees: HOA fees are required in some neighborhoods and can range from as low as $200 to $2,500 a month.

  • Vacancies: You might not be able to find a new tenant as soon as the old one leaves. You need to consider the months of not having a rental income.

  • Landlord insurance: This covers damage to the property and the possibility of someone becoming injured while in the home.

Costs Of Selling A House

Selling a home also comes with many costs to consider. Here are some of the most important ones:

  • Home improvements. Many tenants are more willing to rent a home that has recently been renovated or had additions added. You will also need all repairs needed. You will also need a pre-listing inspection to ensure the home is ready to be sold.

  • Real estate commission: You will need to pay up to 6% of the selling price to a real estate agent if you use one.

  • Utilitie:. You have to pay the utility bill until the closing date.

  • Home loan payoff: The remainder of the price you used to sell your home will be used to pay the remainder of the mortgage.

  • Closing fees: You might need to pay some or all of the closing costs, including lawyer fees.

  • Home staging: Staging your home is a great way to entice buyers to make an offer. You will need to show that the home is worth buying by adding some nice furniture or other pieces to increase the appeal. This can cost $2,500 or more.

Summary

The decision to buy or rent your home is important because it will affect your personal and financial life. You need to take care to make the right decision to discuss it with your partner or family when needed. Consider your finances and whether you plan to ever move back into the current home before renting or selling. You also need to determine whether you are willing to be a landlord or not.


Ready to start taking advantage of the current opportunities in the real estate market?

Whether you’re brand new to investing or have closed a few deals, our new online real estate class will cover everything you need to know to help you get started with real estate investing. Expert investor Than Merrill explains the best real estate strategies to help get you on the path towards a better financial future.

Register for our FREE Real Estate Webinar and get started learning how to invest in today’s real estate market!