When you’re ready to move,
figuring out what to do with your house is a big decision. And today,
more homeowners are considering renting their home instead of selling it.
Recent data from Zillow shows
about two-thirds (66%) of sellers thought about renting their home
before listing, with nearly a third (28%) taking that possibility
seriously. Compared to 2021, when fewer than half (47%) of homeowners
considered renting before selling, it’s clear this trend is on the rise.
So, should you sell your house
and use the money toward your next home or keep it as a rental to build
long-term wealth? Let’s walk through some important questions to help
you determine the right path for your financial and lifestyle goals.
Is Your House a Good Fit for Renting?
Before
you decide what to do, it's important to think about if it would make a
good rental in the first place. For instance, if you’re moving far
away, managing ongoing maintenance could become a major hassle. Other
factors to consider are if your neighborhood is ideal for rentals and if
your house needs significant repairs before it’s ready for tenants.
If any of these situations sound familiar, selling might be a more practical choice.
Are You Ready for the Realities of Being a Landlord?
Managing
a rental property involves more than collecting monthly rent. It’s a
commitment that can be time-consuming and challenging.
For
example, you may get maintenance calls at all hours of the day or
discover damage that needs to be repaired before a new tenant moves in.
There’s also the risk of tenants missing payments or breaking their
lease, which can add unexpected stress and financial strain. As Redfin notes:
“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.”
Do You Understand the Costs?
If
you’re considering renting primarily for passive income, remember,
there are additional costs you should anticipate. As an article from Bankrate explains:
- Mortgage and Property Taxes: You still need to pay these expenses, even if the rent doesn’t cover all of it.
- Insurance: Landlord insurance typically costs about 25% more than regular home insurance, and it’s necessary to cover damages and injuries.
- Maintenance and Repairs: Plan to spend at least 1% of the home’s value annually, more if the house 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 and have to cover the cost of the mortgage until you find a new tenant.
- 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 too, if applicable.
Bottom Line
To sum it all up, selling or renting out your home is a personal decision. Let’s connect so you have a pro on your side to help you feel supported and informed as you make your decision.
Sally Heldman
Broker Owner
Metro Brokers / Heldman Real Estate
303.475.4508 CELL
sally@sallyheldman.com