Have you ever considered becoming a landlord and renting out your home rather than selling it? When you decide to leave your home and move on to new opportunities, there are more options than just selling your home. You may have heard of a buyer’s or seller’s market. What happens if you leave your home and you are not in a seller’s market? You might think to yourself, should I sell or rent my home? What option is better for me? What are the pros and cons of renting vs selling? Check out these seven things to consider when looking to rent vs sell a home.
Rental and Seller Market Status
Before you make a decision on the best option for you, you want to make sure that you are well versed in the status of the market. If you are not in a seller’s market, you run the risk of coming out negative in the sale rather than coming out ahead. In addition, you need to consider if your home is located in an area that is attractive for renters.
If you are unsure how to navigate the market or don’t know where to look to determine renting potential, you can contact a real estate professional to help. A real estate professional will know all the details of the current market better than any other source because they have exclusive access to the most up-to-date information for your area.
Amenities and Attractions
If you determine that your home is in a renter’s market, you may want to consider what amenities or attractions your home has to offer renters. This might be anything local such as being close to local parks or museums, the school systems, local crime rates, or proximity to popular employers. In addition, it could be anything you have added to the home such as updated appliances, yard space, pools, gardens, or any other additions to the home.
Another thing to consider when looking at renting a home is if you want to take on the responsibilities of becoming a landlord. If you are familiar with renting either as a landlord or a tenant, you probably already know a little bit about what a landlord is responsible for. You may have to manage listings, lease terms and signing, home maintenance, move in and move out cleaning, and local and state compliance. Consider if you have the time and availability to take care of all landlord responsibilities before listing your home for rent.
If you want to rent but you do not want to deal with all the administrative duties that come with being a landlord, you could consider hiring a property manager. This is a company that deals with all the interactions between landlords and tenants. Basically, they are the middle man between owner and tenant. In situations where a property manager is involved, the owner often does not have to deal with maintenance issues or legal concerns unless issues arise. However, the owner can be as involved or hands-off as they like depending on the agreement with the management company.
Local Laws and Regulations
Regardless of if you are considering renting or selling, you will want to consider all local laws and regulations associated with each. Contacting a real estate professional can help you navigate the inner workings of the process. If you are looking at renting, you will need to consider lease laws, maintenance regulations, and any other local or state regulations. If you are looking at selling, you will need to consider laws regarding financing, appraisals, and inspections which may include additional costs to the seller.
Can You Turn a Profit
When considering selling, you will want to determine if you are going to be able to turn a profit. If you are in a seller’s market and you have home equity, chances are, you are in a good position to consider selling. However, this might not be the case. Depending on local and state regulations, the seller may be responsible for a variety of costs associated with selling a home. This may include updating electrical or structural components to remain in compliance with city codes or it may include closing costs or other fees. A real estate professional will be able to tell you exactly what costs you will be responsible for during the selling process and what your profit prospects will be for your situation.
Finally, you will want to consider if you have a personal attachment to your home. For example, if you are moving in order to take your dream job, but the house has been in your family for generations, you may want to consider renting. This will keep the house in the family and provide passive income while you are away. Then, you can pass the house on to your children in the future or come back whenever you’re ready!
Pros and Cons
So, what are the pros and cons of choosing to rent vs sell a home? Let’s take a look at some of the benefits and downsides of each option.
- Receive money right away
- No management responsibilities
- You may lose money on the sale
- Security, regardless of market fluctuations
- Provides passive income
- Continues to build equity
- Must follow landlord compliance and maintain the property
- You may encounter unexpected costs
When all is said and done, it comes down to your timeframe, expectations, and determination. There are a lot of reasons that you may choose to rent, regardless of the additional work and management. On the flip side, if the market is on your side, selling can also be a great option. If you have taken some time to consider each side and are still asking yourself “should I rent or sell my home?” contact a real estate professional to get a better understanding of your options.