If you’re considering upgrading, relocating, or downsizing your property, you’re probably wondering: “should I sell or rent out my house?”
It’s a tough decision, with no one-size-fits-all answer. Renting out your home has advantages and disadvantages, as does selling your property.
You may be thinking of buying a house and renting it out, or perhaps you want to know how to buy a second home and rent out the first. Whether you decide to sell or rent your house, this post should give you the tools you need to make the right decision based on your circumstances.
Selling Your Home: Variables to Consider
Although there are many circumstantial things to consider when selling a property, these four points apply to most homeowners:
Fix any major issues
Leaky sinks, damp walls, improper electrical wiring, and inadequate maintenance are just a few major issues that can deter people from buying your property. When a potential buyer comes to view your house, they usually hire a professional to perform an inspection. Therefore, any significant issues must be addressed before you put the property up for sale.
Get your home inspection ready
Stop thinking about your house as a home and start treating it like a product. This means decluttering and removing memorabilia and personalized photos.
Research the market
Whether you decide to rent or sell, you need to understand the local property market so that you can calculate a fair price. If the market is heading for a downturn, try to negotiate a quick sale, or you may end up stuck.
Name your price
This is the most crucial factor when selling your home, as each home will sell if it is priced correctly. However, you must be realistic about your home’s current market value.
Renting Your Home: Variables to Consider
If you’ve decided to rent your home, ask yourself these questions:
Will renting be profitable?
Before you decide, “should I rent my house or sell it?” you need to calculate if renting your home will be profitable. To work this out, add up all rental expenses and subtract them from the money you’ll earn from being a landlord.
Are you ready to be a landlord?
Rental ownership can be stressful, especially if you end up with nightmare tenants. Bear this in mind before you commit to becoming a landlord.
Are you coming back?
If you are temporarily relocating, renting is an excellent idea as you know you’re returning to your home at some point. Whereas selling a house and buying a new home incurs a myriad of costs, and you can’t return to the property.
What about taxes?
If you’re going to earn a lucrative income from your rental property, make sure you understand the tax consequences.
Determining Your Homes Value
Once you’ve decided, “should I sell my house or rent it out?” there are several ways you can determine its value:
Online valuation tools
Online home valuation calculators combine public records and any information you can provide to estimate your home’s value.
Work with a realtor
Realtors use expert techniques and experience to determine the value of a property. They are a great resource if you need a second opinion to compare to the online valuation tool.
Hire an appraiser
Appraisers can offer impartial, well-researched estimates of a property’s value. They calculate figures by visiting your property and reviewing any pending sale or recently sold comparisons.
Analyze your comparables
Comparables (comps) are used in house valuations where a recently sold property is used to determine a similar asset’s value. Comps include:
- Structural components and features
- Age and size
- Sales history
- Any upgrades or improvements
- Overall condition of the home
- Neighborhood and location
- Listing price vs. actual sale price
Using a Rent vs. Sell Calculator
One of the best ways to determine “should I sell or rent my house?” is to use a rent vs. sell calculator.
These free online tools divide the net operating income from renting a property from the house’s estimated sale price. This provides you with an investment yield, otherwise known as a ‘capitalization rate.’ If this figure is less than 5.7%, you’re better off selling your property rather than renting it.
To use a rent vs. sell calculator, simply enter a few details, like sale price, taxes, and income, and you’ll find out what your “capitalization rate” looks like.
Which is Right for You?
Are you still asking the question, “should I sell or rent my house?” Our team of property experts can help you to make a decision.
We pay cash for single- and multi-family townhouses, houses, or apartment properties “as is” in Texas, Georgia, and Florida. In as little as five minutes, we will make you a cash offer via our advanced buying tools.
For a free, no-obligation estimate, call (855) 931-4635 or fill out this form on our website today.