As a homeowner, deciding whether to sell your house or rent it out can be a difficult decision. With the housing market fluctuating and changes in life circumstances, you may find yourself debating which option is best. I'm here to provide a complete guide walking you through the major factors to consider when weighing selling versus renting out your property. Should I sell my house or rent it out? Keep reading to find out. I also highly recommend that you watch the video below to gain more tips from a real estate expert.
The Financial Considerations
One major consideration is finances. Will you profit more from selling the home and cashing out your equity versus generating rental income? Here are some key questions to ask yourself:
What is your mortgage payoff amount? If you have significant equity built up, selling may be more profitable.
What are home prices like in your area? Check comparable listings to estimate your home’s market value if sold.
What is the going rental rate for similar properties? Estimate your monthly rental income minus expenses like taxes and maintenance.
Crunching the numbers will give you clarity on which option may result in greater profitability. Running projections can account for closing costs if selling and vacancies if renting. Getting clear on the financials is step one in deciding whether to sell or rent out your residential property.
The Convenience Factor
Beyond finances, you should also reflect on convenience and your personal lifestyle and life stage considerations. Key questions here include:
Do you still live in the home? Relocating adds complexity versus renting out an existing investment property.
Are you prepared to be a landlord? Managing tenants, repairs, and upkeep requires time and effort.
How accessible is the property? Proximity can impact the ease of managing it as a rental.
It’s not all about money—being a landlord is a major responsibility. If taking on that role sounds unappealing, selling may be wiser despite any lost potential rental income.
Other Benefits of Selling Your Home
While renting out your property can provide regular income, selling has its own advantages too:
Closing out your equity for a lump sum: Selling allows you to access your entire equity at once versus spread out over months and years. This can help fund major purchases and life events.
Greater flexibility: Without a long-term tenant tying you down, selling frees you up to relocate or pivot investment approaches more easily.
Less stress: Avoid the headaches accompanying landlord responsibilities by washing your hands clean and selling.
No rental market stresses: With inventory low and competition high in many areas, selling provides guaranteed returns versus struggling to find renters.
Weighing these selling perks against renting pros like ongoing income and diversifying your investments can further steer your decision-making. You can also get help or advice from real estate experts on how to sell your house and make a profit.
Should I sell my house or rent it out?
The Major Steps to Rent Out or Sell Your Home
If you decide renting out your property is best, here is an overview of key steps to take:
Research local rent prices to set competitive rates that attract quality tenants.
Market vacant rentals across listing sites, your network, etc. to find ideal renters.
Vet applicants thoroughly by running background/credit checks to minimize risk.
Draw up a detailed lease agreement to codify tenant rental terms and rules.
Set up systems to efficiently manage rent payments, maintenance requests, and more.
Follow landlord-tenant and fair housing laws as well as tax rules in your jurisdiction.
Alternatively, if selling makes greater sense, here are the main steps and some tips for a smooth process:
Interview real estate agents to find an experienced listing agent to market your home effectively.
Enhance property aesthetics with staging, cosmetic fixes, and landscaping to maximize marketability.
Gather disclosures and legal property docs early on to evaluate what buyers may request.
Strategically price your home based on location, unique features, and comparables.
Negotiate offers and handle buyer contracts, appraisals, mortgage terms, etc.
Navigate pre-close tasks like inspections, title searches, and the closing process itself.
Having guidance from a trusted real estate advisor can simplify these key steps for both renting out or selling your residential property. More on working with a dedicated agent below.
Weighing Your Options
Deciding whether to sell your house or rent it out is unique to your situation. Thoroughly assess the possible financial returns and gauge the best move for your lifestyle, life stage, and capacity to take on landlord obligations. If the decision still feels unclear, consider connecting with a knowledgeable real estate professional to help you sell your home or rent it out.
Watch this video to gain more tips and great advice from a real estate expert.
Client Success Story
As a real estate investor and agent for over 10 years, I've worked with many homeowners facing the decision of whether to sell their property or rent it out. One client I'll call Drew had a particularly interesting situation.
Drew is an active real estate investor with a growing portfolio of rental properties in the Des Moines area. When he inherited a single-family home from a relative, Drew came to me seeking advice. The three-bedroom, two-bathroom home was mortgage-free but needed some updating. Drew was deciding whether to invest money into renovations and then rent it out, or sell it as-is to add cash he could deploy elsewhere.
We discussed the pros and cons at length. Renting would provide monthly cash flow after getting the place rented out. "With market rents around $1,500 per month and expenses of $800, you could see $700 per month profits," I told Drew. However, managing another rental came with responsibility and the house might sit vacant at times. Selling would net a quick return. I advised listing it for $250,000 based on comps in the neighborhood and his ability to deploy his cash in an investment that better suited his financial needs.
Ultimately Drew decided to sell and use the profits to acquire a small apartment building which he felt aligned better with his investing strategy. The property sold quickly with multiple offers over asking. Drew was thrilled with the outcome. "Thanks for walking me through the options Darson. With your advice I made the right call to sell this one and redeploy into that 20-unit complex," Drew told me.
The experience with Drew was rewarding and shows the relationships I build with investor clients. My background as an investor myself allows me to see situations from their perspective. Combining that with in-depth market knowledge helps homeowners and investors make informed decisions. I look forward to many more successful deals together!
Get Personalized Insight from a Local Real Estate Expert
As an experienced Realtor here in Des Moines, I would be happy to sit down and discuss your options at no charge. Over a complimentary consultation, we can review the pros and cons of selling your home versus renting it out given current housing market conditions in central Iowa and your neighborhood.
With over a decade of experience in residential real estate and property management, I can provide tailored guidance on maximizing home value plus projections for rental income potential after expenses. My goal is to equip you with the insight needed to make a confident decision given your financial situation, life plans, and risk tolerance.
If you have been asking yourself “Should I sell my house or rent it out?”, take me up on this free consultation. I would be glad to help you gain clarity around what move makes the most sense for your property, finances, and lifestyle. Give my office a call or book a meeting on my calendar to get the ball rolling towards a clear path forward.
I look forward to connecting with you!