When it’s time to move, deciding what to do with your current home can be a tough call. Lately, more homeowners are considering renting out their homes instead of selling them.
In fact, recent research from Zillow shows that 66% of sellers thought about renting their home before listing it, with nearly 28% seriously considering it. That’s a big jump compared to 2021, when just 47% of homeowners entertained the idea of renting. Clearly, it’s a growing trend.
But is renting out your home the right choice for you? Or should you sell it and use the proceeds toward your next adventure? Let’s break it down and explore what might be best for your lifestyle and financial goals.
Is Your Home Rental-Ready?
Before making a decision, take a closer look at whether your home is a good fit as a rental property. Here are a few key factors to consider:
- Location: Is your neighborhood popular for rentals?
- Condition: Does your home need significant repairs before it’s tenant-ready?
- Distance: If you’re moving far away, managing maintenance and tenant issues could get tricky.
If these factors seem like obstacles, selling might be the simpler and smarter choice.
Are You Ready To Be a Landlord?
Being a landlord isn’t just about collecting rent—it comes with responsibilities and challenges. For example, you might get late-night maintenance calls, deal with unexpected repairs, or have tenants who miss payments or break their lease.
As Redfin puts it:
“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.”
It’s important to ask yourself if you’re prepared for these situations—or if hiring a property manager is something you’d consider (keep in mind, they usually charge about 10% of your monthly rent).
What About the Costs?
If you’re considering renting for the passive income, it’s important to factor in all the additional expenses that come with it. Here are some of the major ones to keep in mind:
- Mortgage and Taxes: Even with tenants, you’ll still need to cover these costs, which might not always be fully offset by rent.
- Insurance: Landlord insurance costs roughly 25% more than regular homeowner’s insurance but is crucial to protect you.
- Maintenance and Repairs: Plan to spend at least 1% of your home’s value annually for upkeep—more if your home is older.
- Vacancies: There may be months when your property sits empty, and you’ll have to cover the mortgage yourself.
- Tenant Screening: Finding good tenants may require costs like advertising and background checks.
Bottom Line
Selling or renting your home isn’t just about dollars and cents—it’s about what works best for your current situation and long-term goals.
Let’s connect so we can explore your options together and make sure you’re fully informed as you decide what’s right for you. Whether you choose to sell or rent, I’m here to guide you every step of the way! 😊
