When moving to a new state or country as a homeowner, there are decisions you’ll want to make. Should you sell your home or rent it? What are the pros and cons of each?
As many of you may know by now, selling my home was a decision that I considered after I found out that my husband was cheating and I initially filed for divorce. Granted, we had talked about moving out of Colorado and were already looking at homes in other states, but that was together as a couple. Now it was just me and there were just too many memories made in the house together, and to be honest, I didn’t want to live in the same state as he did. I contacted my realtor, Jin, who is amazing, by the way, and we looked at all our options.
During that time, my husband packed up, moved in with his mistress, and together they finally moved out of state. Somebody say hallelujah! That still didn’t stop me from contemplating selling, but what stopped the process was that my boys wanted to finish both high school and college. They each had one year left and didn’t want to start all over again in a new state. Oh, the things you do for kids! Well, I’ve done worse (like staying in a marriage that didn’t benefit me), but I decided to postpone selling.
Now, a year later, things are different. I’m in a better place now, and I’ve packed myself and Madison up and moved across the pond to the United Kingdom. This move may or may not be permanent, but let’s just call it a semi-permanent move for now, which now leads to my dilemma. My boys no longer want to live in Colorado either. My eldest wants to make the move to Florida, and my youngest wants to go to college out of state.
What do I do?
Whether you want to move or have to move, deciding what to do with your home can be stressful. You may be wondering, like I am, “should I sell my home, or should I rent it out?” While you may have an immediate preference, there’s a lot to consider, and you’ll definitely have to weigh the pros and cons of each.
The Pros of Renting Your Home
You Can Use The Rental Income To Help Cover Your Mortgage Payments
If you’re still paying off your mortgage, renting out your home can help you cover those payments. In fact, this is one of the main reasons people choose to rent out their homes instead of selling them.
You May Be Able To Deduct Certain Expenses, Like Repairs And Maintenance, On Your Taxes
Another financial perk of renting out your home is that you may be able to deduct certain expenses, like repairs and maintenance, on your taxes. Consult with a tax advisor to see what expenses you can deduct.
You’ll Still Have Equity In Your Home
If you eventually do want to sell your home, you’ll still have equity in it. And, depending on how long you’ve been paying off your mortgage, that equity could be significant.
You Don’t Have to Worry About Finding A Buyer
When you’re ready to move, finding a buyer for your home can sometimes be challenging. If you rent it out instead, you don’t have to worry about that – your tenants will take care of finding their own replacement when their lease is up.
You Can Keep Your Home As A Future Investment
Renting out your home can also be a good way to keep it as a future investment. If you eventually do want to sell it, the value of your home will likely have increased, thanks to appreciation and any upgrades or renovations you may have made while it was being rented out.
You May Get to Keep The Property In The Family
If you’re not sure what you want to do with your property or if you’re not ready to sell, renting it out is a great way to keep it in the family. This way, you can decide what to do with it later on down the road.
The Cons of Renting Your Home
You May Have to Pay Higher Property Taxes
Depending on where you live, you may have to pay higher property taxes if you rent out your home. This is because, in some areas, the tax rate is higher for rental properties than it is for owner-occupied homes.
You May Have to Get Special Insurance
You’ll also need to get special insurance for your rental property. This type of insurance covers things like damage caused by tenants and liability in case someone is injured on your property.
You’ll Be Responsible For Maintenance And Repairs
As a landlord, you’ll be responsible for any maintenance and repairs that need to be done on the property. This can be expensive and time-consuming, especially if something major needs to be fixed.
You May Have To Deal With Difficult Tenants
Even if you screen your tenants carefully, there’s always a chance you’ll end up with difficult tenants. You may have to deal with late rent payments, property damage, or noisy neighbors.
You May Have To Deal With Difficult Tenants
Of course, as with anything, there are also some downsides to renting out your home. Perhaps the biggest downside is that you may have to deal with difficult tenants. You’ll need to screen your tenants carefully and put everything in writing to minimize the risk of problems down the road.
You May Have To Make Repairs And Perform Maintenance More Often Than You’d Like
Another downside to renting out your home is that you may have to make repairs and perform maintenance more often than you’d like. Tenants aren’t always as careful with your property as you are, so things may break or need fixing more often than if you were living there yourself.
You May Not Be Able To Deduct All Of Your Expenses On Your Taxes
While you can deduct some expenses, like repairs and maintenance, on your taxes, you may not be able to deduct all of your expenses. Consult with a tax advisor to see what expenses you can and cannot deduct.
Your Tenants May Not Pay Their Rent On Time – Or At All!
Unfortunately, one of the risks you take when renting out your home is that your tenants may not pay their rent on time – or at all. While you can screen your tenants carefully and put everything in writing to minimize this risk, it’s still a possibility you’ll have to deal with.
You May Have to Evict Your Tenants
If your tenants don’t pay their rent or if they damage your property, you may have to evict them. This process can be costly and time-consuming, so it’s definitely something you’ll want to avoid if at all possible.
The Pros of Selling Your Home
You’ll Get The Money You Need To Move – And Then Some!
If you’re moving because you need the money from the sale of your home, then selling is obviously the way to go. You’ll be able to use the money from the sale to pay for your move and then some.
You Won’t Have To Worry About Maintenance Or Repairs
Once you sell your home, you won’t have to worry about maintenance or repairs anymore – that will be the new owner’s responsibility. You can just sit back and relax, knowing that someone else is taking care of everything for you.
You Won’t Have To Deal With Potential Damage To Your Home
When you rent out your home, there’s always the potential for damage to be done to it. Whether it’s from normal wear and tear or from tenants who don’t take care of the property, damage can cost you a lot of money. When you sell your home, you won’t have to worry about that anymore.
You Won’t Have to Worry About Tenants
If you sell your home, you won’t have to worry about tenants – again, that will be the new owner’s responsibility. This means you won’t have to worry about things like rent payments, property damage, or noisy neighbors.
You Can Move On With Your Life
Selling your home can help you move on with your life after a divorce, the death of a spouse, or any other major life event. It can be therapeutic to get rid of everything and start fresh somewhere new.
The Cons of Selling Your Home
It Can Be Stressful
Selling your home can be a very stressful experience. You’ll have to deal with showings, open houses, real estate agents, and all sorts of other things. If you’re not prepared for it, it can be overwhelming.
It Can Take A Long Time To Sell
Depending on the market and the state of your home, it could take months – or even years – to sell your home. This obviously isn’t ideal if you’re trying to move quickly.
You May Not Get the Price You Want
Depending on the market and the condition of your home, you may not get the price you want for it. If you’re selling in a buyers’ market or if your home needs a lot of repairs, you may have to take less than you were hoping for. Unfortunately, you may have to sell it for less than you want in order to get rid of it quickly.
You May Have to Make Some Repairs Before You Sell
Depending on the condition of your home, you may have to make some repairs before you sell. This can obviously add to the stress and expense of selling your home.
You May Have To Pay Capital Gains Taxes On The Sale Of Your Home
If you sell your home for more than you paid for it, you may have to pay capital gains taxes on the sale. This can obviously eat into your profits from the sale.
You’ll Have To Find A New Place To Live!
Of course, one of the biggest downsides to selling your home is that you’ll have to find a new place to live. This can be difficult, especially if you’re moving to a new area.
As you can see, there are pros and cons to both selling and renting your home when you move. It’s important to weigh all of your options carefully before making a decision. If you’re not sure what to do, you may want to consult with a real estate agent or a financial advisor. They’ll be able to help you make the best decision for your unique situation. Only you can decide what’s best for you and your family.