Are you currently tossing around the idea of renting your home out? Maybe you aren’t sure if you should sell it or not instead. There are good arguments for both, so let’s take a moment to explore them below.
Why Renting Your Home Out is a Good Idea
If you’re on board with being a landlord, here are a few reasons you should consider renting your home out rather than sell it.
- Positive cash flow – Do the math. After paying all the monthly expenses like the mortgage payment, insurance, taxes, upkeep, etc. are you generating a profit? If so, keeping the property makes sense.
- Return on investment – Figure out how much you’d make if you sold it. Be sure to subtract sales fees like closing costs and agent fees. If you won’t make much or nothing at all, keeping it and renting it out is the better option, especially if you’re generating a positive cash flow every month.
- Waiting out a bad market – Is your home located in an up-and-coming area? If so, holding onto the property for a while and renting it out in the meantime can garner a better asking price later if you decide to sell.
- Option to return to the home – If the home holds sentimental value, you may not want to get rid of it. Perhaps you plan to move back into it at some point in the future. By renting it out, you have the option to return to the home at any time down the road.
Reasons to Sell Your Home Rather than Rent it Out
Of course, there are many good reasons to sell your home instead of renting it out.
- Better return on your investment – Figure out how much profit you’d make annually by renting out the property and then compare that to the profit you’d make if you sold the property outright. If selling gives you a bigger ROI, then sell.
- Don’t have to be a landlord – If you’re not keen on the idea of being on call 24/7, selling your home rather than dealing with tenants is the best choice for everyone.
- The property isn’t a good rental – For one reason or another, your home may not make a good rental property. It might be its location or condition, but if you run the numbers and they aren’t what you want, it’s probably best to sell the home and invest the proceeds elsewhere.
Sometimes life throws a curveball that forces you to make tough decisions. Whether to sell your home or rent it out when such a pitch comes your way can be a daunting one. Hopefully, the information above helps you make the right decision for you.