Deciding what to do with your house when you’re ready to move can be challenging. Should you sell it and use the money for your next adventure, or keep it as a rental to build long-term wealth? It’s a question many homeowners face, and the answer isn’t always straightforward. Whether you’re curious about the potential income from renting or worried about the responsibilities of being a landlord, there’s a lot to consider.
Key Questions to Help You Decide:
Is Your House a Good Fit for Renting?
Even if you’re interested in becoming a landlord, your current house might not be ideal for renting. If managing maintenance from afar, dealing with a neighborhood that isn’t great for rentals, or making significant repairs sounds overwhelming, selling might be your best option.
Are You Ready for the Realities of Being a Landlord?
Managing a rental property isn’t just about collecting rent checks. It’s a time-consuming and sometimes challenging job. You might get calls from tenants at all hours with maintenance requests, deal with property damage, or handle late payments. As Investopedia highlights, the headaches can sometimes outweigh the profits.
Do You Understand the Costs?
If you’re thinking about renting out your home primarily to generate extra income, remember that there are additional costs to consider:
- Mortgage and Property Taxes: You still need to pay these expenses, even if the rent doesn’t cover all of it.
- Insurance: Landlord insurance costs about 25% more than regular home insurance.
- Maintenance and Repairs: Plan to spend at least 1% of the home’s value annually, more if the home is older.
- Finding a Tenant: This involves advertising costs and potentially paying for background checks.
- Vacancies: Lost rental income if the property sits empty between tenants.
- Management and HOA Fees: A property manager typically charges about 10% of the rent. HOA fees are an additional cost too, if applicable.
Bottom Line
Selling or renting out your home is a personal decision that depends on your circumstances. Make sure to weigh the pros and cons carefully and consult with professionals. A real estate agent can provide valuable advice to help you make the best choice for your future.
