There are many reasons you might be looking to sell your home: upgrading your first property, moving across the country, or just starting over.
However, with rising mortgage rates in the United States, the price of many first-time buyers for their dream properties, and worries about an economic downturn, current homeowners may be wondering if now is the right time to sell.
Depending on your current financial situation, career, and local real estate market, you might be better off renting out your old home than selling it.
There are pros and cons to keeping your property: Passive income could help boost your finances, but there are additional costs if you take on the role of owner.
Choosing to become a homeowner could be the best financial decision if you have financial security. Cedric Stewart, real estate expert at Entourage RG, says Newsweek the main consideration when considering renting your property is affordability.
“Just because you can rent a house doesn’t mean you should,” Stewart said. “When you become a landlord, you’re a small business owner providing housing in exchange for financial profit. It’s supposed to be a win-win.”
Stewart suggested considering what you can and can’t afford before committing to renting your home. “Can you afford to keep this property if it remains vacant? Can you afford to maintain the property if there is a repair problem? Cash positive What are the other costs (including hassle and your time) associated with renting the property?
“If you answer yes to all of these questions, the numbers look good and you don’t have to write a check every month to keep the property, it can be a good financial decision. Rental rates are not tied to the housing values, so you should be able to make money even if the housing bubble “bursts” and property values go down.”
Renting out your home could be a worthwhile investment, but it depends on where your property is located and the opportunity in that market.
Stewart said your home could be a good rental property investment area if it’s in an “area where people want to live with a stable population and a stable workforce.”
In some places, rental prices may be enough to cover your overdue mortgage payments. Ultimately, you should consider your mortgage interest rates, additional taxes, and the cost of home insurance.
Stewart says you should consider talking to a real estate agent who can put you in touch with a tenant or give you an idea of your rental prospects.
A trained professional would also be able to tell you if your location is desirable for tenants, such as if it’s near a university, downtown, or major employer.
Stewart suggests contacting a professional if this is your first rental. They can also advise you against simple pitfalls that could cause you financial difficulties.
“If you do it yourself, it can be messy and downright dangerous,” Stewart said. “People can manipulate technology and paperwork to present themselves in a false light. Also, there are certain documents made to protect both parties that not everyone may know about or have access to.
“For this reason, when first renting, you should consider hiring an experienced real estate agent or property manager to help you through the process.
“Anything you pay them is a pittance compared to what it would cost if you missed a step/document. Then once you get the hang of it, if you want to do it yourself, you’ll be in a better place position.”