Did you know that single-family rentals are on the rise? If you own a home and are deciding between renting or selling your home, we can help.
In this guide, we’ll go over why you should consider either selling or renting your house.
Want to learn more? Keep reading.
Why Should You Consider Renting Your Home?
If you find a responsible tenant to rent your home, you can use the rent to pay your mortgage each month.
Your tenant will pay for you to earn equity. After the mortgage gets paid off, you get to keep the rent payment and supplement your income.
Having a rental can help diversify your income streams and investments. You will reduce your financial risks. If you lose your job, you can relax a bit, knowing you have the rental income.
Later on, if your retirement savings aren’t enough, you have real estate to sell.
Consider the Costs of Renting
You will need to think about the fees for renting your home. Your mortgage payment will also include the interest and principal amount.
Consider what the property taxes are in your area. You could end up paying at least two percent of your home’s value every year. Mortgage insurance premiums could be high.
Landlord insurance is another thing to consider. The insurance will cover tenant damages and protect you if someone gets injured.
If your condo or house belongs to an association, you will pay fees to belong to that association.
Replacements and repairs will cost you throughout the year. You might need to fix the doors, walls, or roof over time.
When a tenant leaves, you might repaint the interior and exterior of the house. You will need to clean the carpet between new tenants.
If you end up advertising your house in a newspaper, you’ll pay for the ad. You could advertise for free on an online website like Craigslist or your Facebook page.
How Profitable Is Renting a Home?
Get an estimate of rent revenue by checking out the postings in your neighborhood. Talk to a real estate agent to find out what the rate is in your area. You could also look into historical rental trends in your area. Are you in a city that is experiencing a rise in rental prices?
Your revenue needs to go beyond the costs of your rental, so you make a profit. The costs of your home are tax-deductible, decreasing the amount of income tax you have to pay.
If your rental revenues go beyond your expenses, you could turn a profit. Yet, if you don’t turn a profit right away, don’t worry. Some rental rates are low during specific periods, but you still have to pay a high mortgage.
How to Calculate Profitability
Write down all your expenses. Include the mortgage balance, property taxes, insurance, rent price, and association fees. Also, include how long you plan to own the property.
List things like maintenance costs, selling costs, and property management fees. By knowing the potential costs, you can have a better understanding of the profit. You’ll see whether it’s a good decision to rent to tenants or sell your home.
Do You Want to Be a Landlord?
Rental ownership can be stressful because you don’t have control over the tenants. Having a stranger live in your investment can be a worry. If you’re worried about what’s happening, you might have a difficult time enjoying your day to day life.
You might get respectful tenants who pay on time and take care of the property. Other times, landlords have to deal with tenants who don’t pay their rent on time and ruin the place.
You will need to deal with their phone calls and stay up to date on maintenance. Some people prefer to hire a property manager who will take care of these things.
If you sell your home, you won’t have to worry about these potential issues.
Selling Your Home
If you sell your home, you get to walk away from a significant burden. You won’t have to worry about renting your house. Selling is stressful, but you get a check and move on with your life.
You won’t worry about renting a house and getting a call in the middle of the night. You also won’t have to stress about getting a bad tenant who could ruin your investment.
Get ready to sell your home and check out these home selling tips.
Don’t Worry About a Dropping Market
If you think the real estate market will lower in the next few years, you’ll want to sell now. If you don’t sell now, you could lose revenue as the market drops.
It’s difficult to gauge the future market. Yet, renting your home could cause you to get tied down.
You Can Get a Down Payment for Your Next Home
People sell their homes instead of renting because they get a down payment for their new home.
A more significant down payment will help you find a home in a top area.
Now You Know More About Selling or Renting
We hope this guide on selling vs. renting was helpful. Are you ready to be a landlord? You might want to rent to a tenant and pay off your mortgage. Take your time deciding between selling or renting your home.
Don’t forget to keep browsing our other helpful resources on real estate, business, and more.