Should You Sell or Rent Out Your Current Home?
Over the past few years, real estate has become a very hot commodity. Scarce inventory has caused prices to skyrocket for both hopeful homeowners and renters alike, causing those of us who were already considering a move to wonder whether we'd be better off selling our homes to the highest bidder or holding onto it and transforming it into a rental property instead. Below, real estate agents share the pros and cons of both methods, which will help you determine which avenue is best for you.
Selling Versus Renting Your Home
To determine whether it's better to sell or rent out your property, write down the most you could get for your home in each scenario, according to Talia McKinney, a licensed real estate salesperson at SERHANT. "See what makes the most sense for you and where you'll make the most profit," she says. "Take a look at other properties in your neighborhood to compare pricing. You can also work with a real estate agent who is familiar with your neighborhood and market who can give you their opinion on pricing."
The Pros and Cons of Renting Your Home
Since it's common for rentals to go for well above the asking price, there's a good chance that you could give your monthly income a boost by holding onto your property and onboarding a tenant. With that said, becoming a landlord isn't a risk-free venture. "Securing a quality tenant is the paramount challenge for a lot of property owners," explains Andrew Westphal, a Corcoran and Fresh Starts Registry Expert. Additionally, keep in mind that tenants can damage or abandon the property—or withhold payments. "These factors should be considered when becoming a landlord. What if the income from the tenant does not cover your operating expenses or mortgage payments? If the revenue suddenly stops and you would have trouble covering your own obligations, selling the property should be a serious consideration," he says.
The Pros and Cons of Selling Your Home
With most listings going for top dollar, selling your home could be a quick way to secure a lump sum payment. You're likely to be in an especially good position to make a profit if you purchased your home a long time ago when real estate values were lower—or if you've owned the home long enough that you've built up some equity. However, if you've only recently purchased the property at an inflated value, you might not be able to walk away with as much money as you'd hoped. "Depending on the market, you could risk taking a loss on your property and get less money for your home than you paid," explains McKinney. "If you added high end fixtures or appliances, or if you did renovations or updates, you may not always make that money back in the end when you sell."
Do the Math
Setting emotions aside—it can be scary to rent your home out to tenants who might not care for it and difficult to say goodbye to a property you cherish—crunching the numbers is the best way to decide which path you should choose. In the end, it may come down to which option not only gives you the most money, but offers you the most financial and emotional security down the line.