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Should I Sell My House or Rent it Out

Should I Sell My House or Rent it Out: Things to Consider About Renting Your Home

If you are thinking about moving from your old house for a different one – to upgrade, to downsize, to relocate, or for some other reason – you are probably thinking the same question most people in your situation: “Should I Sell My House or Rent it Out?”


Image by Schluesseldienst from Pixabay

As there are so many big decisions in life, there is no easy answer to this one. Renting out the home and selling the house each offer advantages, and potential drawbacks, that you must think weigh carefully before making a decision. Here are things to consider about renting your home.

Do you want to be a landlord?

Being a landlord is often stressful because you have little control over what tenants do in your home. You may get great tenants that pay rent on time and respect the property. Or you may get tenants that never pay rent on time and wreck the place. Even you have great tenant, you will still deal with the stress of needing to answer their phone calls, keep up with maintenance, etc.

You can always hire a property manager, which if you have a good one makes your life much more comfortable. But there is a cost (usually about 10% of your rental income).

Local housing/rental market conditions

Do some research into what the rental prices are in your area, as well as the current selling prices of the homes. Also look at the demand for rental properties and the number of current listings available. Doing your homework will provide you with a much clearer idea of what kind of rental income you can expect, as well as what may need to be done to the home to get it up to standard if necessary.

Your financial situation

If you are moving, chances you will need a new place to live in. Does your financial situation qualify you to get a new mortgage loan for your new place? Do you need to sell your current home in order to get a new loan? With your current home monthly mortgage loan payment, does your DTI still good range?

Can the rent enough to cover the mortgage payment and expenses?

Generally, you want your expected rental income to cover your regular expenses such as mortgage, property taxes, ongoing maintenance, HOA dues, and allow you to add to your personal reserves for unexpected repairs. If not, are you willing or able to pay out of pocket every month to cover the cost?

What are the tax implications?

Each situation is unique, so before you decide to rent out your home consider talking with a tax professional. They can help you figure out how much you can expect to pay in taxes on the rental income.

Capital gains tax

Converting your home to a rental property without a plan in place may end up costing you big in the end. If you only plan on renting the home for a few years before selling, you could miss out on a big tax break. If you had sold the property while it was still your primary residence, or within the allowable time frame after converting to a rental, you could have received the home sale capital gain tax exclusion to minimize – or eliminate – the tax you’ll owe after the sale.

Bottom line

Deciding to hold on to the property and rent it out or sell it will depend on your circumstances and what will fit your needs and situation. Only you will be able to tell what option makes the most sense and will work for you and your family.

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Article Name
Should I Sell My House or Rent it Out?
Description
Should I Sell My House or Rent it Out: Things to Consider About Renting Your Home. As there are so many big decisions in life, there is no easy answer to this one. Renting out the home and selling the house each offer advantages, and potential drawbacks, that you must think weigh carefully before making a decision. Here are things to consider about renting your home.
Author
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Swee Ng Realtor® with HomeSmart
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