If you and your partner are more than ready to live under one roof but you’re trying to decide whether to hold and rent or market it to sell, the most sensible answer might not be so easy to accept. Of course, there’s always an emotional element, complicated by cold, hard numbers, and a healthy dose of uncertainty about the local market’s future, just enough to introduce more doubt and confusion.
The sell or rent conundrum isn’t all that uncommon, but, too many couples make the wrong decision, sometimes even knowing it isn’t the right choice, for the sake of expedience, emotion, or for a false sense of their financial future. Regardless of the reason, disappointment and discouragement typically follows. If you want to avoid this, know when it’s time to sell and when it’s time to rent.
When to Rent a Home
If you’re considering holding and renting your home, there’s definitely at least one reason why. This is where you begin, ask yourself why you’re thinking about renting it, and, be completely honest. Should you be staying in the area, that is one factor in favor of renting, because you’ll be able to personally check-in periodically. Being ready and willing to be a landlord is also a factor–you ought to be comfortable with having to manage the property and deal with problems.
“Whether you should rent or sell your home addresses the question: how much can you sell your home compared to what you still owe. Regardless of what you decide, experts suggest knowing your competition to know how to price your home for sale or rent.” —Fox Business
The rent versus mortgage calculation is another factor in your decision. Remember, it’s not just your principal and interest the rent will have to cover, there’s also insurance, taxes, maintenance, repair and replacement costs, vacancy periods, marketing, and more. If you can handle all of these things, from being a landlord to making a real gain, then renting is an option. However, that still doesn’t mean you should rule out selling.
When to Sell a Home
Selling a home is often the better choice because of all the hassle that goes into renting. Think about these things to decide if selling is the best option:
- The purchase price versus mortgage balance. It’s not how much you list the property you ought to consider, but what you’ll likely get, less any costs. If your mortgage balance is less than the market value and you have a buffer, then selling is quite realistic.
- You’re willing to let go emotionally. This is one reason why some homeowners become begrudging landlords–they can’t let go and endure all the burdens of having to manage a property from a distance.
- The market is on the rise. When the local market begins to bring home values up, that’s a good thing for sellers–to a point. The time will come when buyers choose to pull back or can’t qualify for mortgages and sellers are then stuck with waiting out the market.
- The neighborhood long-term outlook. If the neighborhood is solid, that’s one thing. However, if there are going to be changes, like new construction that’s more attractive, then selling is a better long term decision.