Should I Sell or Should I Go (Rent It Out)?
When someone moves out of a home that they still own, they technically have three options: do nothing,rent it out, or sell it. But, if you’re looking to earn money, then the last two options are your main routes. However, deciding between selling or renting out a house can be more complicated than it is, and you’ll need to consider several critical factors to make the smarter (and more profitable) decision.
Do You Have Plans for the House?
To be more specific, are you ready to sell or rent out the house? Some homeowners may see the house as something that they can come back to or bequeath to their children. Selling your home means permanently getting rid of it, but if you could see yourself coming back or giving the house to a family member in the future, renting it out temporarily is the right choice.
What Is Your Financial Position?
Obviously, selling is more immediate/short-term as compared to renting out. And one major factor you need to consider is if you need the money now, or if you’re financially stable enough that a more long-term alternative (renting out) is viable. If you’re currently dealing with financial issues (perhaps even being on the cusp of bankruptcy) then selling may be the best solution — even if renting it out may be more profitable in the long-term. Alternatively, you can also exchange your current one for a different like-kind property (through a 1031 exchange) which may be more valuable in the long run, or is easier to rent out.
How’s the Market?
This boils down to how much you’ll be earning if you sell your house now versus selling it in 5 or even 10 years. If you’re able to calculate that selling it at a much higher price in 5/10 years can yield a significantly higher profit than you would in selling it now, then renting out the house and waiting for its value to peak before selling could be the smarter decision. This may be too technical for some, so consulting with an expert in the real estate market would allow you to make the more intelligent choice.
What’s Your House’s Current Condition?
Next, you’ll need to consider the status of the house you’re looking to either sell or rent out. Renters are more “forgiving” when it comes to a home with old/outdated fixtures and an average-looking aesthetic, as they know that they’re just there temporarily, and won’t have to renovate and refurbish it. If you’ve ascertained that selling the house is more profitable now, it’s best to do a “tune-up” to make it easier and quicker to sell — i.e., make considerable improvements in and out the house to make it look more appealing to buyers.
Are You Ready to Be A Landlord?
If renting out your house seems to be the more logical choice (at least for now), you have to consider the responsibilities of being a landlord. You’ll have to deal with setting/calculating rent, marketing, screening tenants, collect rent, and maintaining the house, as well as manage all the legal paperwork, managing finances (and ensure profitability), and also handle delinquent and troublesome tenants. In the long-run, these are all worth the effort, but if you’re too busy or wish to have a property management expert do it for you, you can have your house in Salt Lake City handled by a property management company instead.
As with all things that involve money, the smart thing to do is to consider all the important factors to make an informed and more profitable decision. So, whether you’re keen on selling or renting out your home, make sure to ask yourself these questions first to minimize any regrets along the line.