Rent or Sell Your Home: Which is Best?
Written by Graham Team · Graham Team Real Estate Advisors — Henderson & Las Vegas, NV · Contact
Deciding whether to rent or sell your Las Vegas home? Weigh rental income, landlord duties, HOA rules, and maintenance costs before choosing your…
Dated: August 7 2024
When it’s time to move, deciding whether to sell your house or rent it out is a significant choice. Should you cash in for your next chapter, or hold onto the property for potential future gains?
Many homeowners grapple with this decision, and finding the right answer involves weighing various factors, including potential rental income and the duties of a landlord.
Here are some important considerations to help guide your decision:
Is Your Home Suitable for Renting?
Not every home is cut out for the rental market. Factors such as location, the condition of the property, and the distance you’ll be moving can impact the practicality of renting it out. If managing the property from afar seems daunting, or if the home requires substantial repairs to be rental-ready, selling might be the preferable route.
Are You Prepared for Landlord Duties?
Being a landlord involves more than just receiving rent payments. It can be demanding and sometimes problematic. You might receive maintenance calls at inconvenient times or deal with tenant issues ranging from property damage to unpaid rent. Investopedia notes:
“Many landlords encounter more problems than benefits. Speaking with experienced landlords and conducting a thorough cost-benefit analysis can reveal if selling might be a simpler and less stressful option.”
Do You Understand the Financial Commitments?
Renting out your home isn’t just about the extra income; it’s also about the costs involved. Bankrate points out several expenses to consider:
• Mortgage and Property Taxes: These costs continue regardless of rental income.
• Insurance: Expect to pay about 25% more for landlord insurance than regular home insurance.
• Maintenance and Repairs: Budget at least 1% of the property’s value each year for upkeep.
• Tenant Acquisition: Costs here include advertising and background checks.
• Vacancies: Unoccupied periods mean lost income.
• Management and HOA Fees: Hiring a property manager can help, but expect to pay around 10% of the rental income; HOA fees might also apply.
Bottom Line
Ultimately, the choice to sell or rent out your home hinges on your personal circumstances. Carefully weighing the benefits and drawbacks and consulting with real estate professionals can provide clarity and confidence in your decision. We’re here to help you explore all your options and choose the path that best suits your future plans.
Graham Team Real Estate • (702) 930-9551 • Team@grahamteamnv.com
3007 W Horizon Ridge Pkwy, Ste. 210, Henderson, NV 89052
Frequently asked questions
How do I decide whether to rent or sell my home?▾
To decide whether you should rent or sell your home, evaluate your financial goals, local market conditions, and your willingness to be a landlord. If you need immediate cash for a new purchase, selling is best. If you prefer long-term wealth building and can handle property maintenance, renting might be the right choice.
What are the hidden costs of renting out my house instead of selling?▾
When deciding to rent or sell your home, consider the ongoing costs of renting. These include landlord insurance (which costs about 25% more than standard home insurance), annual maintenance (budget 1% of the home's value), property management fees (around 10% of rental income), vacancy periods, and HOA fees.
Is it difficult to be a landlord if I choose to rent my home?▾
Being a landlord is demanding and involves dealing with tenant disputes, late payments, property damage, and emergency maintenance. If you live far away or prefer a hands-off investment, managing a rental can be highly stressful. If this sounds overwhelming, choosing to rent or sell your home by selling is often the simpler path.
How does location affect my decision to rent or sell my home?▾
Location is critical when choosing whether to rent or sell your home. High-demand areas with strong job growth and good schools yield better rental income and reliable tenants. However, if your home is in a declining market or located far from where you currently live, selling is often the more practical option.
Do I need a property manager if I decide to rent my home?▾
While not legally required, hiring a property manager is highly recommended if you live out of state or have a busy schedule. They handle tenant screening, repairs, and rent collection for about 10% of the rent. If these management fees eat too much profit, it may help you decide to rent or sell your home by selling instead.
What are the tax differences between renting and selling my house?▾
Selling your primary residence often allows you to exclude up to $250,000 (single) or $500,000 (married) of capital gains from taxes. If you rent it out, you may lose this capital gains tax exclusion over time and will owe taxes on rental income. Understanding these tax rules is vital when deciding to rent or sell your home.