Should you sell your home, or rent it out?

Dated: 06/25/2019

Views: 33

Should you sell your home, or rent it out?


You’re ready to move, should you sell your house or rent it out?

When making the decision to sell your current home or rent it out, you have to ask yourself one question: Will this property make me money? Do some research and determine what the average rental cost is for a home that size in your area. Typically, rent is higher than the cost of a mortgage. You also have to take in account property taxes and other costs associated with owning the property. If all of theses costs come in lower than what the annual rent cost would be, it may make sense to rent it out. If these costs are higher than what it would cost to rent it, then it is time to put it on the market. 


It is all about that ROI (Return On Investment).

If you sell the house today, will you make money on it or come out with less than you paid for it? Don’t forget that when you sell a home, you lose about ten percent of the sale to closing costs, fees, and other sale expenses. If this number is below what you initially paid for the home, you may want to consider holding on to it and finding some tenants. Holding on to the property will allow you to wait for the right time to sell. Pay attention to the market and make your move when the time is right. 


Don’t forget about taxes. 

If you sell your home and make a profit, you are likely to have to pay capital gains taxes. These taxes can be up to 20%, depending on what tax bracket you fall into. If you hold on to the property, it is possible that the total value of the home will increase and cover the cost of the taxes when you decide to sell. But, the opposite might happen and you could end up selling it for less than you want and have to pay the taxes anyway. There are no guarantees in real estate. Talk with an agent and determine your best plan of attack. 


Look ahead! 

Is your neighborhood on the rise? Are there new businesses moving into the area? Are there a lot of people moving into your city annually? There are a lot of things that go into determining the value of your home. If you answered yes to any of those questions, you may want to hold on to your property and see how the market changes. If you wait a couple years, the value in your home could increase by and cover all the costs that you would have had to pay right now. Do your research and determine if now is the time to sell or hold on to it for a little longer. 


Would you be a good landlord?

Do you think you can handle tenants? Being a landlord is a big responsibility. You have to make sure they pay rent on time, handle any problems that arise with the house, and make sure everything is in working order. But remember, just because you own the home doesn’t mean you have to be the person dealing directly with the tenants. There are property management companies that you can work with that will handle all of those things for you. 


Once you have made the decision to move from your current home, take some time to figure out whether you should sell or rent your property out. Do your research on the neighborhood and determine whether or not your house will appreciate in value in the coming years and figure out what that number looks like. If you can rent the property out and still make a profit, it is a no brainer to hold on to it and use that money to pay off the mortgage of that property, or use it to pay on your new mortgage. Figure out if you want to be a landlord or if you would rather have someone else handle it for you. 

If you are unsure on how to make these decisions, I would be happy to talk it over with you and help you make the right decision. If you would like to talk more, please give us a call at 614-668-4646.

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Born and raised in Washington DC but making his home in Columbus, Kareem Jackson has lived in Ohio since the fall of 2001. Majoring in Communications at the Ohio State University, Kareem graduated wit....

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