Would It Be A Good Idea To Sell Your Home or Turn It Into a Rental?
There are two options for you if you no longer need a real estate property. You can either sell it or turn it into a rental property. Both options have their pros and cons. Carefully think about your choices and select the option that makes the most sense for your situation and financial goals.
Selling Your Home
Selling your home means you will receive a handful amount of money. You can, for instance, use this money to secure and make a down payment on a new home. The main advantage of selling your home is that you can use the money from the sale to easily finance another real estate investment.
Renting Your Home
The benefit of turning your property into a rental is that you will produce a steady income over the long-term. This could be a good way to boost your income monthly. You can use a share of this income to make necessary repairs to the property or to make upgrades and increase its value.
Transforming your home into a rental property means you always have the option of selling it later if you decide you need a lump sum to buy another property or if you no longer want to spend extra money on repairs and maintenance. You can also turn your property into a rental until the market shifts, allowing you to get higher value for the sale of your home.
The downside of turning your home into a rental property is that you will need to become the landlord. You’ll have to find renters, address their inquiries and complaints, and you might even have to dismiss tenants who don’t pay rent. There is also the risk of losing property value over time.
To help lighten this downside, if the finances allow it, you could hire a person to handle these issues for you.
Always remember you won’t be able to start renting your property until it’s considered to be liveable within your local building codes and landlord/tenant laws. You might have to spend a huge amount on repairs, particularly if this is an old home.
Making a Decision
The best choice depends on what your plans are. If you would like to move away for a few years and then return to the area, renting your home on a short basis makes sense. If you’re moving to a nearby city, becoming a landlord is usually manageable.
However, if you’re moving to a different state permanently, selling your home would most likely make more sense. Being a landlord would not be beneficial and you may need money from the sale to help with moving and acquiring property in your new location.
Do some analysis on your local real estate market. If the value of your home is likely to remain steady or to improve, you could turn it into a rental and plan on selling it later. However, if you think your property will lose its value, selling it now would probably the best choice.
The question to ask yourself is: Would you rather get a huge amount of money now or generate a monthly income for the long term? Weigh the pros and cons of each option. Keep in mind that you can always use a management service if you prefer not to act as a landlord for your rental property. Both options allow you to make money with your property.