Over 60% of Americans are homeowners. But there are groups of people like rural dwellers and 20 somethings who are more likely to rent than own. And if you’re a homeowner, renting a home you own can be a good source of income.

Then again, there’s some work involved with becoming a landlord. It’s not just about collecting money each month. And it’s not always easy, especially if you rent to the wrong people.

If you’re on the fence and considering selling versus renting your home, keep reading. We want to help you make the right decision.

We’re going to share with you everything you need to know to decide between renting or selling.

Selling Versus Renting: The Pros and Cons of Both

Should I sell or rent my house? There are benefits and drawbacks to both decisions.

Each homeowner has different circumstances they’re dealing with. To help you decide to rent to sell house take some time to consider your current circumstances and any future plans you may have.

Pros of Selling

There are benefits to selling such as:

• You can afford a more expensive home
• Additional money spent on the new home makes it free to Capital Gains Tax when you sell
• Fewer responsibilities and hassles
• Can spend your equity on other investments that may incur less risk

Cons of Selling

Then again, there are some drawbacks to selling as well such as:

• Your home is an asset that may grow in value
• Keeping the home gives you the potential to earn extra income
• It may take time to sell which isn’t good if you want to sell house fast
• Not always easy to say goodbye to an old home you’ve grown attached to

Pros of Renting

Renting your home can prove to be a rewarding investment for the following reasons:

• You can outsource everything to a professional management company
• Can always move back into the house if you need or want to
• A great tenant will provide income while taking good care of your home
• Can secure capital growth

Cons of Renting

Renting has a few downsides such as:

• Problems tenants can destroy your property, refuse to pay you, and be difficult to evict
• Taking on additional debt in the form of a mortgage is risky
• You may need to make renovations to meet legal requirements
• Can be expensive to maintain

Things to Consider First

Should I sell my house or rent it? It often depends largely on your financial situation.

Renting your home doesn’t guarantee you’ll generate positive cash flow. Renting may end up losing you a lot of money if conditions aren’t right.

Find Out How Much Rent You Can Charge

To determine if renting or selling is the right choice, add up all the expenses of renting out your home. Then subtract them from the money you can make being a landlord.

Don’t forget to factor in any tax benefits you’ll receive. You’ll also have to factor in the additional expenses you’ll incur by renting out your home.

Advertising

If you choose to rent out your home without an agent, in most cases, you’ll have to advertise. To find quality renters, you’ll want to advertise your home on quality sites.

Commission

If you do hire a real estate agent, you’ll need to pay them a commission to find you those quality renters.

Insurance

You’ll need the proper insurance to rent out your home. You may need more insurance than just your homeowner’s insurance policy if you plan on renting out your home long-term.

Management Fees

If you do hire a property manager, they can help make your life easier. They deal with any issues that arise.

However, you’ll also have to pay them for this service.

Mortgage

You’ll need to calculate both the principle and interest. Do so for all properties you have a mortgage on.

Repairs

Renters are notorious for causing some type of wear and tear. Some renters may even cause damage.

Also, homes always need certain repairs and maintenance performed to ensure they’re safe.

Taxes

Most taxes don’t go down if you own a second home, even if you’re renting it out. Check with your state to see what taxes you’re responsible for.

One positive aspect of renting is that there are quite a few tax deductions you can take. You may be able to eliminate taxes on your rental income. You can also deduct for depreciation.

However, while you can avoid capital gains taxes by having that home be your primary residence for two out of the past five years if you rent and then decide to sell, you may be liable for paying capital gains.

Vacancies

You may not always have a renter. That means you may not always have the income to rely on.

Other

If you plan on renting, you’ll need to perform credit checks on tenants. That costs money.

Even little expenses can add up quickly. If you crunch the numbers, you’ll find out quickly whether it’s worth it to rent or sell.

What Else to Consider Before You Become a Landlord

For some, even if the financials work in their favor to become a landlord, taking their physical and emotional health into account helps them decide whether to sell or rent the house.

If you have physical or emotional issues of your own and you can’t afford to hire a real estate or property management company to oversee your home, it may prove to be too much work to deal with tenants.

It’s a 24/7 Job

It’s stressful being a landlord. It’s possible to get a call at 2:00 am to learn there’s a leak that needs immediate attention.

Not everyone enjoys having to handle requests from renters, ask for money each month or is willing to allow strangers to live in their home.

Not Easy to Evict a Tenant

Evicting problem tenants isn’t easy. Not only is it emotionally difficult to evict someone from a home. Especially if you like them but they can’t afford the rent due to illness or losing a job.

Even if the renter is a huge problem, evicting them can be an issue. Laws in some states also tend to favor the renter over the landlord.

Learn More About the Real Estate Market

If you’re considering selling versus renting the first thing you should do is study the current real estate market. Now may not be a good time to sell.

The more information you arm yourself with before you make your decision, the better choice you’ll make. We can help. Keep coming back to learn the latest in real estate.