Choosing to sell your home or rent it out for income requires you to make a financial calculation, but more than that, it also requires you to make some emotional decisions. Before sitting down with a spreadsheet to run the numbers, first have a heart-to-heart with yourself and really think through these two things.
Can you detach emotionally from the house?
When you make the choice to rent your home, the property more clearly becomes an asset you have invested in. This means you need to think rationally, analytically, and coldly about the property as an asset and not one filled with family memories that need to be protected.
If you’re the type of person who is going to worry incessantly about the tenants or get hung up on whether the hardwood floors you just installed will be damaged, turning the home into a rental may not be worth the quality of life impact it could have on you.
Property owners need to be able to set aside personal connections, which can be challenging for someone who used to live in the home, especially if they grew up or raised a family there.
How willing are you to be a landlord?
The second thing you need to be honest with yourself about is your willingness to be a landlord. Whether you self-manage the property or hire a property management company, you will become a landlord in both scenarios.
For some people, this title has political implications. Others just don’t have the heart to evict someone if it comes to that, or they have difficulty with the necessity of being impartial during the tenant screening process.
While the property manager serves as a buffer and takes a lot of the day-to-day out of being a landlord, if there’s a big issue, the final decision will always be yours.
The Bottom Line
Deciding whether you sell or rent your home is not easy. There’s the emotional component and then there’s also your willingness to take on the decision-making and asset-management responsibilities of being a landlord.
Even with a great property manager, owning a rental property is not passive income. You cannot completely sit back and watch the returns roll in.
Being a rental property owner will require you to think about the property regularly, make higher-level decisions, set aside money for capital improvements, and discuss issues that come up with your property manager. You need to be willing to have productive conversations about your property and engage in the process.
If you find that you’re willing and able to do this, then the choice to rent your home becomes a financial calculus. For that, there’s an easier answer. You can look at the numbers and decide financially if it makes sense to hold onto the property or if you should sell and reinvest that capital elsewhere.
To hear more from us as we discuss important considerations when deciding to rent or sell your house, watch our webinar replay here.