It’s moving time, but now you have to decide what to do with your house. Should you rent or sell your home? To figure out the answer, it helps to consider several factors including your financial situation, the local housing market, and what makes the most sense for your life. As you consider whether to rent or sell your home, think through various scenarios and the positives and negatives of each to help you decide.
Review Your Finances
As you decide whether to rent or sell your home, evaluating your financial situation is crucial. To get a better picture of your overall financial health, review your finances and consider how you will pay for your new place. If you are going to buy a new home, assess whether you have enough for a down payment. If you need more cash, then selling your home is best to gather additional funds.
Renting your home is a great option if you don’t need additional funds for a down payment or you own your home outright. Another possibility is that you will be renting instead of buying your next place and only need enough to cover a security deposit. Either way, renting your home brings in additional income as long as the local market’s rental rate is more than your monthly mortgage payment. Since rental money is considered income, it will be considered part of your overall finances when applying for a new mortgage and during tax time.
Research the Local Housing Market
When deciding whether to rent or sell your home, the local housing market is an important factor to consider. Research local rental rates and see what similar places are charging per month. If the average rate is below your monthly mortgage payment, then it makes more financial sense to sell. (Here are the recent rental stats for Kitsap County, WA.) Also, take time to research the local housing market and see what similar houses in your area have sold for in the last few months. One of our local real estate experts can also provide you with the most up-to-date information and/or provide a free home valuation. If the value of your home has increased significantly, it might be worth selling your home while taking advantage of capital gains tax exclusions.
If you’re selling a home that has been your primary residence for at least two out of the last five years, then you can exclude up to $250,000 of capital gains on your taxes (or up to $500,000 for married couples). The capital gains tax has various rules and restrictions, so research it carefully to make sure you qualify.
Consider Your Lifestyle
Another big consideration when deciding to rent or sell your home is your lifestyle. Do you think it would be fun or stressful to be a landlord? If this doesn’t excite you and sounds like a pain, then selling might be the best option for you. As a landlord, helping your tenants can be a demanding job. If the toilet stops working or water starts leaking, you have to be available to take their calls. Sometimes these things happen at the worst time, like when you’re on vacation or dealing with other life events. Even if your home is in great condition, accidents still happen. You have to be ready to deal with them at a moment’s notice.
Being A Landlord or Working with a Property Manager
If you’re ready to spend time finding great tenants and working with them regularly, renting might be a good choice. You can also hire a property management company to take the stress out of renting your home. We have excellent property managers here in Kitsap County at Windermere Property Management.
Whether you decide to be a landlord or work with a property manager, we suggest you keep $10,000 to $15,000 on hand for unexpected home repairs. Alternatively, if you decide to sell, we have experienced, highly-rated, local real estate experts available to help. And, find out how you can sell your home for more and in less time with our Windermere Ready Program. We invest in your home’s repairs and upgrades to help you sell it for top dollar.