Should You Sell Your House or Rent It Out?
Market and Economics Nick Melzer, JD November 18, 2024
Market and Economics Nick Melzer, JD November 18, 2024
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.
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.
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.”
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.
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.
Real Estate 4-1-1
Knowing what to budget for when buying a home may feel intimidating — but it doesn’t have to be. By understanding the costs you may encounter upfront, you can take con… Read more
Foothills Community Resources
At Denver Foothills Property, we’ve always been committed to delivering unparalleled service to our clients in the unique and dynamic Colorado foothills market. Today,… Read more
Market and Economics
2024 was a year full of changes, challenges, and success for me. In early 2024, after dissolving my prior team, I moved to Compass and launched my new brand, Denver F… Read more
Real Estate 4-1-1
Selling your house? Or just looking to increase the value and appeal of your home for when you do? Here’s something you should know – homebuyers are increasingly looki… Read more
Real Estate 4-1-1
Trying to decide whether it makes more sense to buy a home now or wait? There’s a lot to consider, from what’s happening in the market to your changing needs. But gene… Read more
Colorado Guides
Winter in Colorado brings the perfect opportunity to lace up your skates and glide across some incredible ice-skating spots. Whether you prefer the serenity of outdoor… Read more
Market and Economics
A lot of people assume spring is the ideal time to sell a house. And sure, buyer demand usually picks up at that time of year. But here’s the catch: so does your compe… Read more
Real Estate 4-1-1
Building equity in your house is one of the biggest financial advantages of homeownership. And right now, homeowners across the country are sitting on record amounts o… Read more
Market and Economics
When you sell your house, ideally, you want it to go something like this: your house sells for top dollar, you get it sold quickly, and it all goes down without a hitc… Read more
As a former attorney, he knows what it means to represent a client zealously, competently, loyally, and with their best interests at heart and he firmly believes that everybody deserves that type of service from their real estate agent too.