Should you rent or sell a home or rent it out?
Are you worried you’ll make the wrong financial move? Here’s how to make the right decision.
Get out some paper and pencil and ask yourself a few key questions. This will help make the “sell vs. rent my home” decision much easier. Here are a few questions to consider:
- What is your financial situation?
- What are the market conditions like for rental homes in your neighborhood?
- Write down the top 5 "must haves" you want for your future housing/living situation in the next 5-10 years.
- Do you see yourself returning to your current home in the future?
- What is your understanding of what's required to be a landlord?
- How well have you researched the impact of state and federal income taxes?
- Is the current housing market a "Hot" market for selling?
What is your financial situation?
If you are comfortable with covering your mortgage if the renter misses a payment or the home is left unrented for a month or two, then renting may be an option. Another financial question will come up in the application for your new home purchase. Does your previous mortgage and your new mortgage make you unqualified. Sometimes financial institutes like to see at least a years worth of rent before they will allow you to take credit for the rental income.
What are the market conditions like for rental homes in your neighborhood?
Does the market rental prices in your neighborhood cover your current mortgage? If so then this may help make the decision to rent. They is a selling the home market, and a rent it out market. Which market will be the deciding factor is city by city, and neighborhood by neighborhood. Sometimes the market is house by house; a 2 bedroom 2 bath might rent better than sell. Or a 3 bedroom 2.5 bath home may sell better than rent.
Write down the top 5 "must haves" you want for your future housing/living situation in the next 5-10 years.
Are you going to move back into the area; if you are leaving it and this is the reason for selling. Are you looking to make real estate part of a retirement portfolio, if so then again maybe renting is a good option. What is the main reason for your moving? These are just a few of the reasons to look at when compiling your list. Pink Pearl Real estate offers a free consultation in this area to help you reach your decision.
How well have you researched the impact of state and federal income taxes?
Yes once you move into the realm of renting property you become an investor and will have some impacts to your current tax situation. Having an investment portfolio and a small tax burden is often not a bad thing just something to be aware of so that you don't miss out on reporting.
What is your understanding of what's required to be a landlord?
Not everyone is cut out to be a landlord. But then again there are many services available that make home rentals a hands off situation for the owner, and put the landlord hat on the service provider. Again there are lots of pluses and minuses for the decisions to be made. The circumstances is to have all the facts before making a decision.
Is the current housing market a "Hot" market for selling?
The current market in your neighborhood could also impact your decision on selling the home vs renting the home. If for example homes are on the market longer for sale than for rent; this might be a big factor in your decision. Maybe the market is so hot you can get more than your asking price for your home. Or maybe the market is such that no one is getting the asking price; now the amount of equity in your home becomes a big factor.
Sell your home or rent it out Pink Pearl Real Estate is here to help.
All in all there is actually a lot of information needed for this decision. Because of the uniqueness in each situation it would be impossible to put it all into a single page like this. Additionally there is a lot of information you need for this decision not readily available in open sources. Your Real Estate agents / professionals have this information readily available to them and are very open to helping you out. At Pink Pearl Real Estate, we welcome the opportunity to help you decide which way to go.