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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