Should You Sell Your Home or Rent it Out?

When buying a home, you choose a property which suits your unique, specific needs. But, you are not guaranteed that the home will suit those needs indefinitely. For instance, your first home may be small and after some time you may decide to upgrade by buying a larger home as your family expands. You may also start with a large home and decide to downsize once children move out. Work can also force you to relocate. But regardless of the reason, you have to decide whether to sell your home or rent it out.

Here are five major factors to consider when making this decision:

• Cash Flow Generation

Among the major factors to consider is the ability of the property to generate cash flow. In simple terms, once you rent out the property and deduct all associated expenses like insurance, taxes, mortgage, repairs, vacancy, utility, and management, will you earn a monthly loss or profit? If you realize that you will make a loss, sell the property.

When making this consideration, take a careful look on the rental market. Visit online rental websites to find out the amount for which homes in your neighbourhood in a similar condition are renting for. Additionally, consider the number of listings which are available and what you may have to do to bring up the property to the best standards. This will give you an idea whether you will make loss or profit after deducting the expenses.

• How Long Will You Be Gone?

Are there chances that you may return to the neighbourhood after some time? Or are you looking for an exit strategy? The time and money which is spent on selling a home and buying a different one can make renting the current home the smartest option. Therefore, determine the duration for which you will be gone to decide whether to sell or rent out your current home.

• Future Projections

Where is the neighbourhood of your property heading? The value of your property is determined by numerous factors. These include long-term construction plans and national trends. Perhaps, a real estate agent will guide you in this. Basically, a good agent will explain your home’s appreciation potential and whether hanging on to your property might pay off in the long run.

• Are The Hassles of Being a Landlord Worth It?

Managing a rental property is not easy. It entails dealing with several issues that include uncooperative tenants and emergencies which may occur at the middle of the night. If you opt to hire a property manager, you have to part with about 10% of your rental income. Therefore, determine whether the earned income is worth the hassles.

• Tax Implications

Each property has a unique situation. It’s therefore important to consult a tax professional to guide you in making the decision whether to sell or rent out a home. A good tax professional will help you in figuring out the amount that you will pay from your rental income as taxes.
When deciding whether to sell your home or to rent it out, consider these five important factors. This will enable you to make a choice which works not just for you based on your current needs, but also for your family and its financial future.

Originally published at InvestmentRealEstate.biz