Which Is Better - Renting Out or Selling Your Home?

When you arrive at a crossroads in your life where you are looking to get a different house, your current home may be a problem and you'll need to how to deal with leaving it as you move on with your life. This fork in the road leads you two places - either you rent out the place or sell it to someone else who wants it now. Both options admittedly have their own caveats. That's why we are here to help you weigh out the options and determine the best route for your current situation.

Renting the place out

The Pros

1. It's sure money for you every month

Being a landlord definitely is great, as long as you have the capital to get yourself another home while your old house turns into a source of income. Because real estate does nothing but appreciate in value over time, you're pretty much set in banking on a great long-term investment if you turn your previous home into a rental space.

2. Benefits in taxation

Since you're turning the property into a rental unit, the law states that you can save with several benefits that you previously couldn't take advantage of. This includes real estate maintenance fees, travel costs, repairs cost, interests on the mortgage, and council rates.

3. The ever-increasing rent

Thanks to inflation, your previous abode is now your personal passive income. Your fixed-rate mortgage rate is set, rent is projected to increase roughly 3% annually, and your mortgage will not go up. This means that the numbers will easily get very pretty the longer you rent out the property - all you have to do is make sure you're not mismanaging or mishandling the funding.

The Cons

1. The responsibility of being a landlord

There are several factors that may prove renting out your property to be tricky, but rest assured these problems aren't too hard to solve. Still, they can be a pain to deal with - but that's the price you pay for this kind of financial acquisition. Some pain points can be terrible tenants (rowdy or late paying), unexpected and urgent repairs (occurring at bad times), higher insurance fees, and an occasional empty unit delay between tenants.

2. Getting a home loan may prove to be harder than it seems

Some money lender restrictions may prove to be a bit more complicated and difficult to work with, especially if they're requiring an income bracket way above your pay grade. It's a typical crisis that you're looking yearning for something from the future but your current situation serves as some form of a barricade - so if you still haven't gotten yourself a rental income portfolio or a large income in general, it may prove to be quite tasking to get yourself that necessary mortgage.

3.The market just might crash (and burn)

Small are the odds that this may occur, but there ae occasional dips in the real estate market. Crashes are incredibly rare, and in the the DC area our real estate market is seen as very stable. But it can happen where your property loses value, so you'll want to be sure you have the staying power to hold onto the property through good and bad for approx. 3 to 5 years before needing to sell. That should get you through any typical market fluctuation.

Selling the unit to another person

The Pros

1. Getting it off of your back

Once the sales process is done and you've handed the property over, you're now instantly richer and no longer have to deal with the property; you're now moving forward from it with cut ties. No tenants to think about, no maintenance to keep track off - it's all done.

2. Making money for Down Payment

Since the last properly is already sold, you'll definitely have the money to pay for expenses, fees, and Down Payment for the new, better, and preferred property you're about to move into. This way, your bank account won't take the brunt of the expenses and you'll be in a better financial standing moving forward.

3. You Can Avoid a Market Downturn

If you're somewhat knowledgeable on property markets and you're seeing that things aren't looking too good, then selling the property before the dip is definitely a wiser way to go about with things.

The Cons

1. Beware the Need for Fixing and Renovations

You definitely have some repairs, furnishings and quick fixes necessary for your old home to become eligible for a sale. These are both mandatory fixes and additions to make the property more desirable - making sure prospective buyers would like what they see from the first time they laid eyes on your property.

2. Sales might not be as quick and easy

The reality is a home sale is not really an easy task. Selling a home can prove to be quite tough and may present some issues if you do not meet your initial expectations when turning the house into cash. To avoid this pitfall, make sure that you get a super-competent Realtor, have the willingness to make the necessary updates and repairs, and realistic time-line and price expectations for selling the house.

We hope this quick list helps you determine if renting or selling your previous home is the ideal choice for you. For best results, it's always wise to consult a well-experienced real estate agent before moving too far making your decision. They can be a great source of advice, whichever way you end up going.

Don't hesitate to seek help from Julie Grandon, in the Arlington, VA and the Washington, DC area for these questions - she is more than able to help you out and get the ball rolling as soon as you have questions, and more than happy to help you find the right solution in your unique situation.