There is no one answer and many, many things to consider when deciding about whether selling or renting out your house that no longer suits you is the way to go or not. First, I urge you to speak with your accountant or financial planner before selling or renting your home. He or she will be able to help you determine if keeping the home to rent to a tenant is a sound financial move – whether or not it will produce positive cash flow. If it won’t, and you’ll be looking at a loss every month, consider selling the home. But here are a few other things you may want to consider while waiting for your accountant to get back to you.
Condition of the home
Selling a home as-is isn’t quite as easy as you may think. If there are significant problems, a buyer’s lender may require them to be remedied before proceeding with the loan. Even smaller problems may cause a significant reduction in the selling price and a lengthier sale process. Tenants are far more likely to overlook a home’s flaws than a potential buyer. If you don’t have the funds to make repairs, renting the house out instead of selling may be the best option, provided your financial counsellor agrees that all other considerations point to renting as well.
Can you tolerate being a landlord?
Now, if your home is in pristine condition and you have even a small emotional attachment to it, you may not want to rent it out and selling it may be the better option. Tenants are notorious for not caring for homes as a homeowner does, allowing problems to fester without notifying the owner, causing additional damage. Let’s face it, the mere act of living in a home can cause damage, from scuffed baseboards to burnt countertops and dead plants. If the thought of any of this damage breaks your heart, perhaps you should reconsider becoming a landlord. Then, there is the routine home maintenance that you’ll be on the hook to perform, despite not living in the house. Guess who pays for the plumbing bill when the tenant’s child tries to flush his toys down the toilet? If the roof leaks, or the stove needs repair, the onus is on you to set things right. If you lack the energy, desire or the funds to make repairs or replacements, landlording is not for you.
Your tolerance for risk
Becoming a landlord is a risky endeavor. What will you do if the rent is late or if it isn’t paid at all? Will you have the money to make the house payment? Will you have the time and money to spend on protracted and stressful eviction proceedings? If not, you either shouldn’t become a landlord, or find the extra money to pay a professional property manager.
I’m not an accountant so, again, I urge you to contact yours. Taxes are a subject that require proper advice and expertise and you need to find out how it will impact on you when you own an investment property. I do know that there are tax deductions for investment property owners, and your accountant or financial advisor will be able to show you what they are.
Selling the home
If you sell your home, contact a real estate agent that you know or one that is active in your area and he or she will show you the current status of your local real estate market and will carry out an inspection of your home and provide you with a report on a likely selling price range should you decide to sell. You never know , you never know you may be pleasantly surprised when you learn how much your home is worth right now. Since you don’t need the money to purchase the new home, why not consider investing it for your future? Or, maybe take that family vacation you’ve been dreaming about?