Should I Sell or Rent Out My House? The Questions to Answer Before You Decide

Because that's the money that stays parked if you rent. If you sold today, after paying off what you owe and the costs of selling, you'd keep a certain amount. That amount is your equity turned into cash.

If you rent, that money stays inside the house. It may keep growing if the house goes up in value, but you can't use it for anything else. So the first question isn't how much a tenant would pay you. It's what you'd do with what you'd keep if you sold.

I walk through how to work out that number in the down payment for your next house may already be inside the one you own.

This is the question that decides the most. If you're buying another house and the down payment comes from the one you have, renting can leave you without a down payment for the next one, or with a smaller one than you expected.

Ask your lender two things before you decide:

1. How much do I need to buy the next home if I don't sell this one?
2. How do you treat a house I'm going to rent out? Some lenders count the rent you expect to receive, with conditions; others have you qualify carrying both payments.

With those two answers, you know whether renting is even possible for you, before you get to whether it's a good idea.

Renting isn't just collecting a check every month. It's being the owner who answers when the air conditioning dies in August, when the walls need paint between tenants, and when the house sits empty for a month and the mortgage payment still shows up.

A few honest questions:

• Do I have savings for a big repair without counting on the rent?
• Do I have the time, or will I pay someone to manage it?
• Do I live nearby, or will I be hours away?
• Does my homeowners association (HOA) allow rentals, and under what rules?

There are no right or wrong answers. There are answers that tell you whether this option fits your life.

Several things, and a different person confirms each one:

• Property taxes. The homestead exemption is for the home you live in. If you move out and rent it, it usually stops applying and the tax bill can go up. Your county appraisal district confirms it.
• Insurance. A rented house needs a different kind of policy. Your insurance agent tells you which one and how much changes.
• Your current loan. If you bought with a primary-residence loan, ask your lender what your loan says about renting the house and when.
• Taxes when you sell later. Today, when you sell your primary home, you may have a tax benefit on the profit. If you rent it out for a while, that benefit can change. How long and how it applies is a question for a CPA. Ask before you rent, not when you're ready to sell.

Plenty of people consider this. It works best when it's decided with a date and with numbers, not as "we'll see." Keep in mind that selling a house with a tenant in it has its own steps: the lease stays in force, showings are coordinated with whoever lives there, and the house doesn't always show the way it did when you were taking care of it.

If you're torn between selling now and waiting, when selling is not the right move yet may help. There I tell you, just as plainly, when waiting is the better choice.

With one sheet of paper and two columns:

1. "Sell" column: what you'd walk away with, and what you'd do with it (the down payment on the next home, paying off debt, savings).
2. "Rent" column: what would come in each month, minus the mortgage payment, taxes, insurance, HOA dues, repairs and the months without a tenant. You fill this column in with your lender, your insurance agent and, if you'll hire one, a property manager.
3. Under both: how much time and peace of mind each one costs you.

When you see the two columns side by side, the decision usually becomes clear on its own. And if you're selling in order to buy, the next step is the plan on paper, with dates.

Is it better to sell or rent out my house?

It depends on what you'd walk away with if you sold, whether you need it for your next home, and whether you're ready to be a landlord. With those three answers, the decision is yours and it's clear.

Will you help me rent it out?

No. I don't manage rentals or find tenants. I help you see the selling option clearly so you can compare with real numbers.

Can I buy another house if I don't sell mine?

It depends on what your lender calculates with both payments. Ask before you start looking.

Do I lose my homestead exemption if I rent the house?

It usually applies only to the home you live in. Your county appraisal district confirms your situation.

Can I sell the house later if it has a tenant?

Yes, but there are more steps. The lease stays in force, and showings have to be coordinated with the person living there.

Selling or renting isn't decided by what the neighbor did. It's decided by one number, what you'd walk away with if you sold, and three questions: whether you need that money, whether you're ready to be a landlord, and what changes on paper. With that in front of you, either one can be a good decision.

Want to know what you'd walk away with if you sold?

If you'd like to start on your own, you can request your home's value at veronicayeary.com/home-value or download the seller guide. If you'd rather go through it together, call or text me at 469-441-8890, or email veronica@veronicayeary.com. No commitment, nothing to sign.

I'm Veronica Yeary, Realtor®, CRS · ABR · SRS · CIPS, with All City Real Estate DFW in Dallas-Fort Worth. I give you clear numbers so the decision is yours.

469-441-8890 · Call or text · veronica@veronicayeary.com · Email