Should You Sell or Rent Your Home?

It's common for homeowners to buy a property with the intention of living there long-term, only to face an unexpected move due to job transfers or other life changes.

When this occurs, you have to decide whether to sell the house or rent it out. This decision becomes more challenging if you have a low interest rate or if the sales market is sluggish.

There is no definitive answer to this decision—it really depends on personal circumstances and long-term objectives. To make an informed choice, consider the following questions:

1. Will the Property Make a Good Rental?

Not all homes are suitable as rental properties. High-end, custom, or uniquely designed homes might be hard to rent or may not yield a strong financial return. If your property isn't ideal as a rental, selling it might be a better option.

2. Can You Emotionally Detach?

Turning a primary residence into a rental requires an objective perspective. If the home has sentimental value, it might be hard to see tenants who lack the same emotional connection altering the home's style, colors, or simply living in it. Viewing the home purely as an investment is crucial for a successful rental experience.

3. Do You Have Financial Reserves?

Owning a rental property involves ongoing financial commitments. Repairs will be needed, property taxes and insurance must be paid, and the market rental rate may not perfectly match the mortgage payment. While a low interest rate offers some financial cushion, it's vital to have reserves for maintenance and potential vacancies. A rental property should not rely on full occupancy for financial success. We advise all real estate investors to maintain a reserve equal to three times the monthly rent.

4. Do You Plan to Sell in the Next 12 Months?

Some homeowners might consider renting out their property short-term, often due to a slow sales market, hoping for market improvement before selling. However, this strategy carries risks. Recent upgrades like new carpet, paint, or appliances could suffer wear and tear from tenants, leading to extra expenses when preparing the home for sale.

Additionally, market trends suggest that home prices are unlikely to appreciate significantly within 12 months. If selling within a year is the goal, we recommend selling now to minimize future risks.

Make the Right Decision for Your Financial Future

For those aiming for long-term financial security, turning a property into a rental can be a smart move. Many owners who initially rented out their homes for a few years now enjoy fully paid-off properties that provide steady income. However, this decision should be based on property suitability, financial readiness, and long-term goals.

Red Herron Property Management offers expert advice in both property management and real estate sales. Contact us today to determine whether renting or selling is the best choice for your home.

Property management is not just our business—it's a relationship between us, our owner-clients, and our tenant-residents. If we can be a service to you, reach out anytime via phone, text or email! RedHerronPM.com

407.385.0204