“Should I sell or rent my house?” is a question homeowners may ask themselves, and a fair one too. It can be hard to decide when there are solid pros and cons to both. On one hand, you might be looking for an opportunity to make consistent cash and wondering if having a rental income is a way to help fulfill your financial goals. On the other hand, managing a property can take up a lot of time and headspace, so selling your home might be a relief.
Before deciding, it can be helpful to understand why people choose to either sell or rent their homes in the first place.
Reasons to sell your home
Here are a few key reasons why you might choose to sell your home:
Buying your next house
A common reason people sell their homes is because they’re trying to buy another one, often leveraging the proceeds from the sale toward buying a new home. By selling, you may be freeing up a significant amount of capital, which can be used to buy a new property potentially that’s better-suited to your current needs.
Operating in a seller’s market
Typically, the housing market impacts buyer and seller behavior. A seller’s market is a special condition where the demand for homes outweighs the supply, putting sellers in an especially advantageous position. During a seller’s market, buyers are often willing to pay above market rates for the home, so the seller may profit more than they would in another market. Evaluating market conditions may help you decide whether it’s a good time to sell your home.
Experiencing a financial hardship
Unfortunately, there are some circumstances where selling your home may be necessary. You may be experiencing financial hardships and are unable to make timely mortgage payments. Downsizing might help alleviate some of those stressors and potentially provide you with needed financial flexibility.
Reasons to rent your home
On the other hand, there may be circumstances that make renting out your home a more appealing option than selling. For example:
Rental income is a consistent, typically monthly payment landlords receive. Depending on the market, you may be able to charge tenants enough that the rent covers your remaining mortgage payments with some profit left over. Receiving rental income may be a way to make a relatively stable, somewhat passive, income. Do note that this would promote you to landlord status, bringing all the responsibilities for property maintenance, tenant placement and more with it — unless you’re prepared to outsource that to a property management company. The latter option would be less effort on your part but may also cut into your rental profits.
Not ready to part ways with your home
You probably know the feeling of being attached to your childhood home, or an apartment where you spent many years of your life. For some homeowners, this feeling of nostalgia may prevent them from saying a permanent goodbye to their home, deciding to rent out their property instead. This prevents that dreaded final farewell, while still providing room to potentially finance another place to live.
In contrast to a seller’s market, a buyer’s market occurs when the supply of homes outweighs demand for them. This means there are more homes on the market and fewer buyers to compete against one another, potentially driving home prices downward. To avoid settling on an offer that’s below what your home might deserve, you may consider renting your property until the market picks back up.
How to sell your house
After considering your options, you may have decided that selling your home is the right move for you. There are a few different strategies that you may want to consider when it comes to doing this:
Hiring a real estate agent
Real estate agent are licensed professionals who help facilitate your home sale. From listing to negotiating and closing, your real estate agent is meant to make the process as seamless as possible. They have resources that you may not have access to and expertise in markets you may not be familiar with. As such, a real estate agent can often be a significant help getting your home in front of the right buyer.
Trusted online listing services
In today’s digital age, there are many trustworthy online listing services you can use to help sell your home, with or without an agent. Sellers can use the platform to market their home, listing the location, asking price and other important details. Buyers then use the platform to search and filter for results that meet their criteria. The service is meant for both parties to communicate more directly and, ultimately, participate in a successful transaction.
For sale by owner (FSBO)
Just like it sounds, for sale by owner (FSBO) is when a seller lists and sells their home without any assistance from a professional real estate agent. You might consider using a trusted online listing service for this venture. FSBO is attractive to some people who want to cut down on costs, might have experience selling other homes or both. Do note that FSBO may take more time and effort on your part than if you were to enlist real estate agent.
How to rent your house out
If you’ve made the grand decision to rent out your home instead of sell, it’s helpful to understand potential next steps. How do you find a tenant, anyway? Here are some things that may help you take that next step:
Utilizing online rental platforms
Just like using online listing services or applications to sell your home, there are many platforms that offer rental listing services. In fact, many listing services allow you to list homes for sale and for rent. Some platforms are free, while others may charge a fee. Take advantage of these resources to market your home by attaching high quality photos, a solid description of your property (including its amenities) and how much a tenant will be charged for rent.
Today, it’s common to see people offering up a place for someone in their network to sublet or rent for extended periods. It may be a good way to find a tenant you can trust through a mutual friend. Just like any other circumstance, it’s important to do your due diligence regarding any potential tenant’s safety and ability to pay rent.
Consider property management
As you know, renting out your house isn’t necessarily a passive endeavor. Once your tenant signs their rental contract, you’re officially a landlord. Understanding your rights and responsibilities is crucial for not only your time, but also your protection. You may want to consider consulting a real estate attorney to ensure you’ve adequately screened your tenants, your rental agreement is comprehensively written and that you have the right insurance policy in place, and that you have the right insurance policy in place.
If managing your property sounds overwhelming or you simply don’t have the time, you may want to consider hiring a property manager to help take on the burden. While this will cut into your rental income, the added convenience and peace of mind may be worth the price.
Deciding whether you should sell or rent your home may be a tough decision to make. Evaluating current housing market conditions, your personal circumstances and how much extra work you might be willing or able to take on could help you make your decision. Before proceeding in either direction, consider consulting a real estate professional for guidance.