Moving into a new home is an exciting time.
The question is … what do you do with your old house?
While you could sell it and use the profits as a down payment or to help cover moving expenses, renting out your old home can be a great investment and source of long term profits.
Trying to decide between selling vs renting? Keep reading for a closer look at the two and some key points you’ll want to consider.
Renting Your House
If you’ve just been transferred or received a job offer in another area, you might be tempted to rent out your house rather than sell it. Even if you’re just moving across town, the extra income you could bring in by renting can be very appealing.
Selling a house is a lot of work too. You have to clean the place up and keep it that way for weeks or months on end.
Investing in real estate is typically a reliable investment that will, most likely, continue to increase in value over time.
Owning income generating property is a great way to increase your income and build long term wealth in many situations, but it’s not right for everyone.
Will You Make Money Renting Your House?
If you’re thinking about renting your house, your first concern should be whether or not you will actually make any money doing it.
Even if you can rent your property out for more than the cost of your mortgage, you still need to consider taxes and other expenses. Renters will, more than likely, be harder on your house than you, increasing maintenance and repair costs.
You will probably also need to carry a different type of insurance on the property and generate enough income to cover other legal costs or pay a management company if you do not have the time or resources to do so.
Do You Want to be a Landlord?
Another question you need to ask yourself before renting out your house is whether or not you really want to be a landlord.
Managing a rental property takes a considerable amount of time and effort. Not only will you need to find and screen renters, but you will also then need to manage any maintenance and repairs that need to be done once the property has been rented.
If you don’t want to manage the property, you can hire a property management company. But, paying someone to take care of the property will add an additional expense.
If the prospect of maintaining and managing your property sounds like something you’d enjoy and have time for, go for it. If not, be sure to think long and hard about what you’re getting in to.
The Pros and Cons of Renting
While owning a rental property can be financially rewarding, it’s not without its downsides. Here are a few of the pros and cons of renting.
Pros of Renting:
- Consistent additional income
- Do not have to endure the stress of selling a home
- Good long term investment
Cons of Renting:
- Being a landlord can be stressful
- May not be profitable for all homeowners
Selling Your House
If you just need to get out of your home and into another, selling your current home is by far the easiest way to go.
Since most homes are sold through realtors, very little work is required from most sellers other than cleaning and getting out of the way for showings.
Selling a home is usually a relatively quick process, but it can take time. There are always alternative options to sell quickly though like dropping the price, including some extras, or working with a “we buy houses” buyer.
Will You Make Any Money Selling Your House?
If you’re trying to decide between renting and selling your home, it’s important to consider whether or not you’ll make any money if you decide to sell.
There are many factors to consider when selling that can really dig into your profits. Just like renting, there’s no real guarantee that you’ll make money selling your home.
If you haven’t lived in the home for very long or didn’t put much money down, you may not have enough equity to make very much money when selling. Realtor commissions and other costs associated with selling can really eat into your profits too.
Walking Away and Buying a New Home
If being a landlord just isn’t for you, selling your home does give you the ability to walk away from your house once it has been sold.
For anyone making a cross country move or for those who simply don’t have time, selling is often the simplest option. While the selling process can be difficult and stressful, once it’s done you can move on and buy a new home.
The Pros and Cons of Selling
Selling a house is typically the easiest way to transition from one home to another, but selling does have its ups and downs. Here are a few of the pros and cons of selling a home.
Pros of Selling:
- The easiest way to move from one house to another
- Can be profitable if the market is good
- Profits available quickly for a new house
Cons of Selling:
- The selling process can be stressful
- You could lose money if the market is bad or if you don’t have much equity
Your Turn: Selling vs Renting
If you’re trying to decide between selling vs renting, you really need to determine which is best for you and your financial situation.
For some, the idea of creating a long term investment with a rental property is an exciting opportunity worth exploring. Others may just want to be out of their house and into another.
Whatever you decide, make sure you understand all of the associated financial costs and commitments.
Looking to take your home to the next level before selling or renting? Check out our recent articles!