December 11, 2023

Depending on where you live, you may find yourself in a tough real estate market — with interest rates fluctuating and the extreme COVID era a seller’s market seems to be over.

So if you’re considering moving – due to a new job in a new town, a growing family member, or simply a new need or need for living space – you may not know what to do with your current home.

Should you sell your home or rent it out? What are the pros and cons of selling your home immediately vs holding your current property until the market improves? What are the costs and benefits of being a landlord?

Because real estate is complex and expensive, we know there are no easy answers to this question. That’s why we asked three real estate experts for their opinions:

  • Nicole Beauchamp, Senior Global Real Estate Consultant and Licensed Realtor Engel and Wilkes
  • Stacy Brown, Director of Technical Training property managementA Neighborhood company
  • Adie Kriegstein, Licensed Real Estate Salesperson and Founder of Experience Team NYC compass

Here are three questions they suggest you ask before deciding to sell or rent your current home, and how you can use your answers to make an informed decision.

How is the real estate market in your area?

What’s the first step in deciding to sell or rent out your home? Review the local housing market – including sales and rentals.

“I would research what the rental market looks like and what the expected rents are,” advises Beauchamp. “Weigh all the costs and fees of keeping the home as an investment against the cost of selling. It depends a lot on the area you live in.”

Kriegstein agrees. “If you’re in a buyer’s market, it’s going to be very difficult for sellers to not only move their property, but also make money from the sale,” she explained. “It’s also important to check the current rental market trends in an area because those trends can also vary – you don’t want a house sitting vacant on the market because you’ll be able to afford it financially.”

“It’s important to consider potential vacancy periods,” Beauchamp said, “and plan for the worst.”

Then again, the markets in your area can prepare you for the best. “Whether it’s schools, shopping, or experiences, homes close to neighborhood hotspots can be great properties to rent,” Brown said. Renting out properties instead of buying them is a benefit if they can find one that fits all the criteria.”

Where do you plan to live next – are you buying or renting?

Whether you’re selling or renting out your home, you’ll need to find somewhere to live – and your next home could play a big part in your decision to sell or rent out your current property.

“If you were renting out your previous home and living in another home you purchased,” Brown advises, “ask yourself what you would do if your tenant moved out or stopped paying rent. Monthly mortgage and utility bills on the property?”

Beauchamp agrees. “Consider the cost of remaining in your existing home, especially if you’re going to live away from the property.” The farther you live from your rental property, the more work you have to do to meet your tenants’ needs and concerns— — whether you walk the distance yourself or hire a property manager to help you. In addition to maintenance costs, property taxes are also a consideration.

If your current home is fully paid off, the decision will be much easier. “If you’ve already paid off your rent, it can be easier to manage because there are no monthly home payments due, and if rental issues arise, they’re easier to deal with,” Brown said. “A property management company can help ensure that The property is ready to rent, the paperwork has been properly filled out, and good candidates who are ready to rent are preparing to move into the rental property.”

On the other hand, those who decide to rent out their new home alongside their old one may find themselves in a sort of housing dilemma.

“Rental properties are income drivers,” Brown explains—and while your tenants may drive some income in your direction, you’re also generating income for the people who own the properties you rent out. If the market makes it difficult for you to buy a new home, and you end up renting for longer than you expected, most of the income you earn as a landlord may go straight into someone else’s pocket.

What are your long-term goals?

What’s the last question you should ask yourself before you decide to sell or rent your home? Whether short-term plans are in line with your long-term goals.

“Whether it’s a good idea to rent out your current home depends on your personal circumstances and financial goals,” Kriegstein explains. “If the rental income is covering your expenses and market conditions are favorable, renting may be a good idea. However, one must also keep in mind potential maintenance repairs, property management costs and market rental regulations as they vary from state to state.”

Beauchamp agrees. “When considering the role real estate plays in wealth creation, I always advise clients to think about the long-term outlook, not just short-term shifts.” For example, if you want to maintain multiple properties as a way to create intergenerational wealth, Renting out a home you don’t currently use allows you to preserve your assets and build long-term stability.

On the other hand, being a landlord is time-consuming — and maintaining a rental property can be more expensive than people realize. If you can’t afford to rent out your current home, you may be better off selling your property and building your wealth in other ways.

“Ultimately, rental properties will depend on the current market and the willingness of the current owner to act as a landlord,” Brown said. “Consulting a property management company with wealth management experience can help homeowners understand current market trends and the potential growth of properties they wish to rent out.”