Should I Sell or Rent My House? Here’s How to Decide

Key takeaways

• Selling your house may be the right option if you need the proceeds to purchase your next home or you plan to move permanently.
• Renting out your house may be the right option if you plan to live in your home again, have a low mortgage rate, or want to generate rental income. 
• Your local housing and rental markets, financial situation, and long-term goals are major factors in deciding whether to sell or rent out your house.

Deciding whether to sell or rent out your house can be complicated in today’s housing market. There are now 58% more sellers than buyers nationwide, the largest gap in Redfin records. With more homes competing for fewer buyers, sellers may need to be more flexible on price or wait longer for the right offer, making renting worth considering for some homeowners.

The right choice depends on your local housing market conditions, your financial situation, and whether or not you want to take on the responsibilities of a landlord. In this Redfin article, we’ll outline what to know when deciding between renting or selling your house.

5 key questions to ask when deciding to rent or sell your home

If you’re considering renting or selling your home, here are some questions to help you get started. 

1. What are the rental prices in the area? Depending on local rents and your monthly mortgage payment, rental income may cover some or all of your mortgage. You’ll also need to factor in ongoing costs like homeowners insurance, property taxes, maintenance, and potential vacancies.
2. Do you need equity from your current home? If you’re planning to buy a new home, you may need the money from the sale of your old one for a down payment on your new house. The typical U.S. down payment amount is $64,000 or 15%, but keep in mind this amount varies by location, home type, and individual finances. If you can afford the down payment on your new home without selling your current one, renting out your home may make sense. 
3. What is the market like in your area? The housing market isn’t consistent across the country, and even different parts of larger metro areas can differ. Nearly three-quarters of the major U.S. metros are currently buyer’s markets, meaning sellers may face more competition, need to be more flexible on price, or wait longer for the right offer. If you live in one of the few remaining seller’s markets, stronger buyer demand may make it easier to sell your home and get a favorable offer. Your local market conditions can help you decide whether selling now or renting out your home makes more sense.
4. Will you live in the house again? If your move is temporary and you expect to return, renting may allow you to keep the home while generating rental income and continuing to build equity. If you don’t expect to live there again, consider whether owning and managing the property still fits your long-term plans.
5. Does your house have the potential to be a good rental property? Your home’s location and condition can affect its appeal to renters. Consider whether it’s up-to-date, near public transit or amenities, and if there are other rental properties in your area. 

What does it cost to rent out your house?

Renting your home can generate income, but it comes with ongoing responsibilities and expenses:

• Maintenance and repairs: Landlords are generally responsible for fixing things like broken pipes, defunct HVAC systems, and structural damage, among other essential repairs. If you don’t have a few thousand dollars on hand to take care of these repairs, you could end up in a bind.
• Mortgage payments and HOA fees: If you have a mortgage or HOA fees, you’ll still need to pay these each month. Depending on your HOA rules and lease agreement, some HOA-related costs may be passed on to your renters..
• Landlord insurance: A standard homeowners insurance policy may not cover rental situations. You’ll likely need a landlord insurance policy, which typically costs anywhere from $800 – $3,000. It offers protection for rental-specific risks, like property damage. Your tenants should also carry renters insurance to protect their personal belongings.
• Finding tenants and potential vacancies: Finding the right tenant can take time and money, from advertising to conducting background and credit checks. As a result, potential vacancies may lead you to pay your mortgage and other expenses without any additional rental income.
• Property management (optional): Hiring a property manager can help take some of the day-to-day responsibilities, but it comes with a cost. Most companies charge a percentage of your monthly rent in exchange for communicating with tenants, arranging maintenance, and collecting rent.

What does it cost to sell your house?

Typically, the cost to sell your home is between 10% – 15% of the sale price. This percentage varies by market, size of your home, and how much you spend to prepare your home for sale.

• Commission and closing costs: Often, these are the highest costs of selling a home. Real estate commissions are negotiable and can vary by transaction. You can also expect to pay closing costs ranging from 1% – 3% of the sale price. 
• Home repairs: You may want to make upgrades or repairs to your home so it can stand out to buyers. This can be anything from refinishing floors to fixing a leaky faucet.
• Staging and photography: Professional staging and photography can help your home attract buyers, stand out against the competition, and may lead to a higher sale price. Professional staging costs an average of $1,849, while the average cost per hour for professional photography is $150. 
• Seller concessions: Sometimes buyers negotiate for seller concessions, which can include buyers’ loan fees, home repairs, or home warranties. Depending on your market and the terms of the offer, concessions can add to your overall selling costs.

5 reasons to consider renting out your house

1. You’re moving temporarily and plan to return to the area someday. 
2. You want additional income, and it fits into your financial plan and long-term goals.
3. There’s strong rental demand in your area, and your home has features or amenities that may appeal to renters. 
4. You plan to hold onto the home as a long-term investment and are comfortable with the possibility that its value could rise or fall.
5. Your current mortgage rate is low, and rental income could cover your mortgage and other ongoing expenses.

5 reasons to consider selling your house

1. You’re moving out of the area or to another state, and managing a rental from a distance may not fit your plans.
2. You need the proceeds from your current home to help pay for your next one, whether for the down payment or other home buying costs. 
3. Your local market currently favors sellers, making now a potentially attractive time to sell.
4. You don’t want to take on the responsibilities of being a landlord, including managing tenants, maintenance, and applicable landlord-tenant requirements. 
5. Rental demand is low in your area, and expected rent may not be enough to cover your mortgage and other ongoing expenses. 

Should you rent or sell your house?

Ultimately, deciding whether to sell your house or rent it depends on the housing market, your short- and long-term goals, and the home’s potential as a rental. If your home has great features, you have the time to be a landlord, and rental income will cover your mortgage and other ongoing costs, then renting may be the right option. If the housing market is in your favor, you plan to move out of the area, or you need the sale proceeds to cover your next down payment, then selling may be the right option.

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