It’s not an uncommon real estate scenario for homeowners to buy a new property and then, as a way to generate income, keep their old property as a rental.
But how do you determine if that scenario is the right one for you?
A recent article from realtor.com outlined questions to ask yourself when deciding whether to sell or rent out your home, including:
- Can I afford two properties? The biggest thing to consider when determining if you should sell your own property or keep it and rent it out is whether you can afford to rent out your home. Look into average rents in your area; then, compare that to the expense of your mortgage and home maintenance costs. If the amount you’ll make in rent won’t cover your expenses, it probably makes sense to sell. (You may be able to write off some of the expenses related to your rental property, like repairs, depreciation, and operating expenses—so make sure to keep those in mind when you’re evaluating rental property cost vs. income.)
- Will my property appreciate in value? The current real estate market can also give you helpful insights into whether you should sell or rent your property. If the current market conditions suggest that your home will appreciate a significant amount in the coming years, you may want to consider keeping it as a rental. That being said, it’s also good to consider opportunity cost—perhaps you would make more money selling your home and investing the profit vs. renting it out.
- Do I have the time and experience to manage a rental property and/or the resources to hire a property manager? Managing a property is work. Before you decide to keep your home and rent it out, you need to be sure you have the time, energy, and experience to handle everything from finding and vetting tenants, to collecting rent, to coordinating repairs. If not, make sure that you have the resources to hire an experienced property manager.