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Sell your Home or Rent it out? Which Option is Better

More and more homeowners are facing this question as they ponder relocating to take a job. There are certainly advantages, as well as disadvantages to both options so it is important to consider carefully.

Most homeowners who are considering either renting or selling their home are not sure which option would benefit them the most financially. Some homeowners are concerned that they will sell their home and then discover later that they want to return to the area only to find that they can no longer afford to buy in that market. Others are concerned that given the sluggish housing market right now they simply won’t be able to sell at all. Then there are the concerns about renting. How much of a hassle is it really to act as a landlord? Would it be better to try to sell now for what you can get rather than rely on rental payments? Or, would you actually make more money collecting rent than selling your home for whatever it will bring in the current market?

If you are considering the possibility of renting your home until the market turns around, the first question you should ask yourself is whether you can afford to rent your home. If you must sell your home in order to raise the money necessary to buy your next home then the obvious answer is that no, you may not be able to afford to rent out the home. Also, you should take into consideration your total mortgage amount and the average rental rates in your area for your size home. If your mortgage payment exceeds the maximum amount you think you can collect in rent then renting is simply not a viable option. On the other hand, if you are considering renting rather than buying in your new location and you can cover the mortgage on your existing home with rental payments then it could be a wise decision to rent while you wait for the housing market to turn around.

You must also take into consideration how you feel about the home itself if you are considering renting and possibly returning to the home at a later time. If you have become very attached to the property, and perhaps lived there for some time, it may be difficult for you to adjust to the idea of having strangers living inside your home. There is also the distinct possibility that a renter will not take care of the property in the way you would like. Best case scenario, they won’t maintain it. Worse case scenario, they might trash it.

You must also take into consideration the responsibilities of acting as a landlord. If you are planning to move a great distance away, the hassles of managing the property from afar may be more than you want to tackle. Hiring a property manager is an easy solution; however, you will pay for that convenience.

If you decide to rent your home, take care not to leave any personal belongings behind and keep in mind that you are entering a business with the rental of your home. If you do not think you will be able to approach the rental of your home in a business like manner, putting any attachment you might have behind you, it really might be better to go ahead and sell it, even if you do not receive the asking price you would like.

If you’re still not sure which option is best, then try combining the two with a lease-purchase agreement or a lease-option agreement. These arrangements give you the advantage of leasing out the home with the prospect of selling it later on down the road to the tenant. These arrangements are becoming particularly attractive in the current market as the housing inventory expands and the pool of buyers able to qualify for standard mortgages dwindles.

While other homes in your neighborhood sit on the market for months on end waiting for the right buyer to come along who can qualify for a loan, you could be reaping the benefits of receiving lease income every month and the prospect of a sale on the horizon. Lease options and lease purchases benefit both sellers and buyers because sellers are often able to gain an advantage over other sellers in the area while buyers who might not have a down payment yet or who have not been able to arrange financing yet are able to go ahead and get into a home.



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