When you're ready to move, deciding what to do with your current home can be a big decision. Should you sell it and use the proceeds for your next step, or keep it as a rental to build long-term wealth? This decision isn't always straightforward. Whether you're interested in rental income or concerned about the responsibilities of being a landlord, there’s a lot to consider.

Here are some key questions to help you determine the best option for your situation.

Is Your House Suitable for Renting?

Even if you're interested in becoming a landlord, your current house might not be ideal for renting. Consider the following factors:

• Location: If you're moving far away, maintaining the property can be challenging.

• Neighborhood: Some neighborhoods aren’t conducive to rental properties.

• Condition: If the house needs significant repairs, renting it out might not be feasible without substantial investment.

If any of these points apply, selling might be your best option.

Are You Prepared for the Realities of Being a Landlord?

Managing a rental property involves more than just collecting rent. It can be a time-consuming and challenging responsibility. Consider these potential scenarios:

• Maintenance Requests: Tenants may call at all hours with maintenance issues.

• Property Damage: Tenants might cause damage that needs repair before the next lease.

• Payment Issues: You may have to deal with late payments or tenants breaking their lease.

Investopedia highlights the challenges:

"It isn’t difficult to find horror stories of landlords troubled with more headaches than profits. Before deciding to rent, consider talking to other landlords and doing a detailed cost analysis. You might find that selling your home is a better financial decision and less stressful.”

Do You Understand the Costs Involved?

If you’re considering renting out your home primarily to generate extra income, remember the additional costs involved. Bankrate outlines several expenses to plan for:

• Mortgage and Property Taxes: You’ll still need to pay these, even if rent doesn’t cover all of it.

• Insurance: Landlord insurance costs about 25% more than regular home insurance.

• Maintenance and Repairs: Plan to spend at least 1% of the home's value annually, more if the home is older.

• Tenant Acquisition: This involves advertising costs and possibly paying for background checks.

• Vacancies: If the property sits empty between tenants, you’ll lose rental income.

• Management and HOA Fees: A property manager can ease the burden but typically charges about 10% of the rent. HOA fees are additional if applicable.

Bottom Line

Deciding whether to sell or rent out your home depends on your personal circumstances. Carefully evaluate your options to make the best choice for your future. Consult with professionals to feel supported and informed as you make your decision. That’s what we’re here for—let’s discuss your situation and determine the best path forward for you.