While selling your home can allow you to pay for your next home, renting out your home can help you build your finances over the long term. However, neither of these is a decision to take likely, as there are advantages and disadvantages to both. If you’re on the fence about what to do, let’s go over some pros and cons to help you decide whether you should sell your home or rent it out.
The Pros of Selling Your Home
The process of selling your house is much quicker and easier than turning your house into a rental, getting tenants, and renting it out. Overall, there are fewer risks and costs, and if you wanted to, you could sell your house as is.
Also, you can use the money you get from selling your house to put a down payment on your next one. Additionally, if it’s currently a seller’s market—meaning inventory is low—you could potentially make more money than the original buying price of your home.
The Cons of Selling Your Home
Unfortunately, you don’t get all the money when you sell your home, as you will have to pay closing costs to your lender. You may also have to pay real estate commission fees for your agent unless you market and sell your property on your own, which isn’t easy nor the best idea.
There’s also a chance it may take a long time to sell your home, and you may have to spend some money on home improvements to increase the property value. If it’s not a good market to sell in, you’ll have to spend extra time waiting for the market to turn and extra money on staging and maintenance.
The Pros of Renting Out Your Home
If you do it right, renting out your home can help you make passive income, so you can build a solid nest egg for yourself or your family. If the market crashes or you lose your job, you have other assets you can rely on financially.
You can also hire a property manager to help you handle the ins and outs of property ownership. If you find a good property management company, making extra money is a breeze. You may have to pay a commission fee, but you’ll have to do much less work in return.
The Cons of Renting Out Your Home
As you may have already guessed, getting a home ready for renting, finding tenants, and being a landlord isn’t easy. While it is a great way to make money, you need to be prepared to put in the effort. You have to deal with maintenance requests and tenants, and you may not have the money to maintain the property during a vacancy. If you don’t have the time, assets, and dedication it takes to be a property owner, this may not be the best option for you.
Now that we’ve gone over some of the pros and cons, which one is right for you? Should you sell your home or rent it out? Neither is necessarily better than the other. It all depends on your financial resources and how much energy you’re willing to put in to make money.