You will have to make many crucial decisions over your lifetime as a homeowner. One of them is to decide whether to rent out your house or sell it.
This is a significant financial decision that requires careful consideration of various factors. Both options have pros and cons, and the right choice depends on your circumstances, financial goals, and personal preferences.
In this article, we'll explore the advantages and disadvantages of renting out your investment property versus selling it to help you make an informed decision.
Renting Out Your House - Advantages
Here are some advantages that you should keep in mind when renting out your house. The rental income is definitely a big pro, but there are other benefits as well.
Generate Rental Income
Renting out your house allows you to generate a steady stream of rental income. This can help offset mortgage payments, property taxes, and maintenance costs.
Build Equity
While tenants pay rent, you continue to build equity in your property. Over time, this can increase your net worth and provide long-term financial benefits.
Renting Out Your House - Disadvantages
Renting out your house as a vacation rental also comes with certain disadvantages. As with everything in life, it has its cons, which might dissuade you from this notion.
Landlord Responsibilities
As a landlord, you are responsible for managing the property, finding tenants, collecting rent, handling maintenance and repairs, and addressing tenant issues or disputes. You might not be ready for such responsibility. That's where property management services come in.
Vacancy and Turnover
Rental properties may experience periods of vacancy between tenants, resulting in a loss of rental income. Tenant turnover can also incur additional expenses for advertising, screening, and preparing the property for new tenants.
Selling Your House - Advantages
Selling a house isn't easy in any market, because it does take time and effort. Here are some advantages to this option.
Lump Sum Payment
Selling your house provides a lump sum payment, which can be used to pay off existing mortgage debt, fund a down payment on a new home, or invest in other opportunities.
Depending on market conditions, selling your house may yield a profit if the sale price exceeds the amount owed on the mortgage and selling expenses.
Selling Your House - Disadvantages
Selling your house means forfeiting rental income, which may have provided a steady source of cash flow and helped cover housing expenses. This is the biggest disadvantage, but there are others.
Transaction Costs
Selling a house incurs transaction costs, including real estate agent commissions, closing costs, and potential capital gains taxes, which can eat into your proceeds from the sale.
It also exposes you to market timing risk, as the market rate of your property may fluctuate based on market conditions and the type of home.
Rent Out Your House or Sell It?
As you can see from the advantages and disadvantages above, it's easier to rent out your house rather than sell it. But you will have to look at your circumstances and decide accordingly.
Once you decide to rent it out, you can use property management services in Brandon, Florida to take care of your rental property. PMI Hillsborough is well-versed in taking care of vacation homes and other properties in Florida.
Don't delay. Contact us to get a free rental analysis.
