If you’re a homeowner who is considering moving to a new area or has simply outgrown your current house, you have a large decision to make: should you sell your house or rent it out? Each option has various benefits as well as drawbacks. To make the decision that is right for you, carefully consider the positive and negative aspects of both selling and renting. Continue reading to gain some clarity on which option is best for you.
Benefits of selling your home
- Potential to make a large amount of money - If the value of your home has increased, or the market is in a good condition, selling your home can allow you to get a great deal and make a large amount of money on the sale. That money can then be used as the down payment on your next home.
- Less stress - While the process of actually selling your home can be a little stressful, once the sale is closed, that stress melts away. You won’t have the burden of taking on any of the lingering responsibilities that come with owning two homes and renting out a property.
Downsides of selling your home
- There’s no turning back - By renting out your home, you still have the option to sell it in the future. However, if you sell your home, your options for renting are eliminated should you end up changing your mind. In addition, if you decide that you want to move back to the area, you will have to go through the process of purchasing a home all over again.
Benefits of renting out your home
- Earn additional income/equity - Perhaps the most obvious benefit of renting out your home is that you can add an extra monthly income stream. That additional income could even help pay off your mortgage and earn you equity on a different property.
- Opportunity to wait for an ideal market - If the market isn’t in an optimal place when you’re ready to move out, renting is a great option. By renting out your home, you can bide your time until the market improves and then sell it for a more advantageous deal.
Downsides of renting out your home
- More responsibility - When renting out your home, you take on more responsibility than you would by just selling it. As a landlord, you will have a host of responsibilities that you may never have experienced before. Unless you’re willing to take on more work, selling your home or investing in the services of a property management company are probably the best options.
- Long list of potential expenses - While you can definitely make money by renting out your home, there are also several expenses that you may incur in the process. Common expenses that landlords face include landlord insurance, repairs and replacements, maintenance costs, property management fees, and property taxes. Consider such expenses when determining if renting is actually the most lucrative option.