Better to Sell or Rent Your Home?

By Scott Boone

Image courtesy Public Domain Pictures

Once you’ve made the decision to move, most folks put their existing house or condo on the market.  While this logic makes sense for many homeowners, it isn’t always the best bet for every homeowner.  Not when the option of renting your home can offer so many advantages.

Sure, if you’re leveraged to the max, selling your existing home might be the only way to afford to move into a new one.  However, if your house has a lot of equity, you’re looking for some tax relief, or there’s even a small chance you could wind up moving back to the area in a few years, considering the rental option could be a win/win.  Here’s why:

      1.      Cash Flow – Depending on your mortgage payments, renting your home out is a great way to generate positive cash flow for years on end.  Even if you break even on your mortgage or lose a little on the monthly rent, you could still wind up ahead of the game when you factor in the tax deductions.  Plus, if your home is expected to increase in value over the next few years, this can be another logical reason to rent it out as opposed to selling your home right now. 

      2.      Tax Benefits – Not only can a rental property produce cash flow every month, at the end of the year it can generate considerable tax breaks.  A rental provides year end depreciation of nearly $3,000 for every $80,000 your home is worth (minus the cost of land). You will also be able to deduct property taxes, association fees and repairs made to the property.  The best part is a rental property can be depreciated for twenty-seven and a half years.  If you’re looking for tax deductions, this could be just the ticket.

      3.      You move around a lot – If your occupation requires you to move frequently, you could wind up taking a bath when it comes time to sell your home.  On average, a home needs to appreciate at least 10% just to break even when it is sold.  If you’ve only been in your home for a few years and are now forced to move, renting your current residence can not only be your best bet, it can wind up being the only way to keep from losing your shirt.

      4.      You’ve lost your job – If you suddenly find yourself unemployed, paying the mortgage can be a burden you’re better off doing without.  Instead of losing your home to a foreclosure, you should consider renting your home while moving into a rental yourself.  Particularly if the rent will at least cover your mortgage and property taxes, moving out of it into less costly accommodations can give you the time to get back on your feet while staving off the wolves.  

Image courtesy of picpedia

      5.      Your current home is in less than ideal condition – Another reason to rent your home as opposed to selling it has to do with the condition of your current dwelling.  If your home has an outdated kitchen, jalousie windows, or a threadbare lawn, it could prove costly to remodel before you can sell.  Renters, as opposed to buyers, aren’t as picky.  While nobody wants to move into a home that’s falling down, renters are willing to overlook items that buyers will zero in on to knock your offering price down by thousands of dollars.

      6.      You haven’t been able to sell your house – If your house has been on the market for a long time and you don’t want to reduce the selling price any further, renting it out could be the best way to keep from taking a big loss.  

      7.      You can make more money by renting as opposed to selling – If your current home is located on or near the beach and you’re willing to leave it furnished, you could make a tidy sum by listing the property for rent on Airbnb or VRBO.  Online vacation rental portals can help you turn your property into a rental profit center by showcasing it to thousands of people who prefer to rent a home rather than stay in a hotel.  For a small piece of the rental fees, these companies will do everything from make the booking to show you how to maximize your return on your property.

Image courtesy of Wikimedia

      8.      You’re ready to retire – If you’ve paid off your home and are ready to retire and perhaps downsize, renting as opposed to selling your home offers several benefits.  Instead of taking a capital gain that a sale would produce, renting your existing home while buying a smaller home or condo could be a way to reap the rewards by generating monthly income that can help pay for your new home without biting you come tax time..  Better still, your current home will continue to increase in value, which means if you decide to sell it in the future you’ll make more than if you sold it now.

      9.      You don’t have to go it alone - If the only thing that’s stopping you from renting your property is distance or having to deal with renters, don’t panic.  Hiring a property manager is an affordable option.  Most real estate companies have experienced property managers who are ready, willing and able to take the burden of being a landlord off your back. They’re a godsend if you’re planning on relocating out of state.  Even if you’re only going to move across town, a good property manager can take the hassle out of renting your home.  By taking a small percentage (typically 10%) of the monthly rent as compensation, a property manager will handle everything from finding qualified renters, to consummating the lease, collecting the rent, and overseeing property maintenance.

      10.  Cover your assets – Another thing you’ll need to look into before you rent your home is landlord insurance.  Unlike homeowner’s insurance, this policy not only covers your property, it also protects you should a tenant damage your property or should someone be injured while on your property.  (If your tenant’s dog bites someone, or one of their friends slips and falls, you could potentially get dragged into litigation.  A landlord policy will cover you in such instances.)

With over 5,000 moves, Scott's Discount Movers has handled moves of all sizes, including local and cross country. If you are looking to move your home or office, you can depend on Scott's Discount Movers to provide a stress-free relocation.