Deciding what to do with your house when you're ready to move can be a significant decision. Should you sell it and use the proceeds for your next adventure, or keep it as a rental to build long-term wealth?

This is a common dilemma for many homeowners, and the answer isn't always simple. Whether you're curious about potential rental income or concerned about the responsibilities of being a landlord, there are many factors to consider.

Let’s explore some key questions to help you determine the best course of action for your situation.

Is Your House Suitable for Renting?

Even if you're interested in becoming a landlord, your current home might not be ideal for renting. Perhaps you're moving far away, making it challenging to manage maintenance, the neighborhood isn't conducive to rentals, or the house requires significant repairs before it can be rented out.

If these issues resonate with you, selling might be the more practical option.

Are You Prepared for the Realities of Being a Landlord?

Managing a rental property involves more than just collecting rent checks. It can be a time-consuming and sometimes challenging role.

For instance, you might receive maintenance calls from tenants at all hours or deal with tenants causing damage that needs repairing before the next lease. You could also encounter situations where tenants fall behind on payments or break their lease early. Investopedia warns:

"It isn’t difficult to find horror stories of landlords troubled with more headaches than profits. Before deciding to rent, consider talking to other landlords and conducting a detailed cost analysis. You might find that selling your home is a better financial decision and less stressful.”

Do You Understand the Costs Involved?

If your primary goal in renting is to generate extra income, remember that there are additional costs you need to consider. As an article from Bankrate outlines:

• Mortgage and Property Taxes: These expenses must be paid even if the rent doesn't cover them fully.


• Insurance: Landlord insurance typically costs about 25% more than regular home insurance and is necessary to cover damages and injuries.


• Maintenance and Repairs: Plan to spend at least 1% of the home's value annually, more if the home is older.


• Finding a Tenant: This involves advertising costs and potentially paying for background checks.


• Vacancies: If the property sits empty between tenants, you’ll lose rental income.


• Management and HOA Fees: A property manager can ease the burden but typically charges about 10% of the rent. HOA fees are an additional cost, if applicable.

Bottom Line

Deciding whether to sell or rent out your home is a personal choice that depends on your unique circumstances. Taking the time to carefully evaluate your options will help you make the best decision for your future.

Weigh the pros and cons thoroughly and consult with professionals to feel supported and informed as you make your choice. That’s what we’re here for.