Make the Right Choice: Renting out property vs. Selling property

Is Your House a Good Fit for Renting?

Even if you’re interested in becoming a landlord, your current house might not be suitable for renting. For example, if you’re moving far away, maintaining the property could be challenging. Additionally, if the neighborhood isn’t ideal for rentals or the house requires significant repairs before it can be rented out, selling might be your best option.

Are You Ready for the Realities of Being a Landlord?

Managing a rental property involves more than just collecting rent checks. It’s a time-consuming and sometimes challenging job. You might receive calls from tenants at all hours with maintenance requests, or you might have to repair damage caused by a tenant before the next lease starts. There are also potential issues like tenants falling behind on payments or breaking their lease early.

As Investopedia highlights: “It isn’t difficult to find horror stories of landlords troubled with more headaches than profits. Before deciding to rent, consider talking to other landlords and doing a detailed cost analysis. You might find that selling your home is a better financial decision and less stressful.”

Do You Have a Good Understanding of the Costs Involved?

If you’re considering renting out your home primarily to generate extra income, remember that there are additional costs you need to plan for. 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 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 home 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.
• 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.

“The late spring and early summer periods are generally regarded as the most favorable times to sell a home. Even with today’s relatively high rates, the supply-demand equilibrium is tilted in favor of sellers due to low inventory in most markets.”

During these seasons, there is typically a surge in relocations, which increases buyer demand. As a result, the shortage of homes available to meet this growing demand provides sellers with several advantages. Rocket Mortgage confirms this by stating:

“Homes listed towards the end of spring and the beginning of summer frequently sell more quickly and at higher sales prices.”