According to census data analyzed by Harvard’s Joint Center for Housing Studies and The Associated Press, the number of single family rentals nationwide jumped 2.3 million from 2006-2010. During the first half of the decade, it increased only 720,000.
Since the housing meltdown, nearly 3 million households have become renters. At least 3 million more are expected by 2015. Rentals are on the rise! Should you rent out your home rather than sell it?
Homeownership is at its lowest point since 1998 and has declined for 6 straight years.
In Costs to Sell Your Home, I listed the costs you will incur to sell your home and showed why, rather than losing your home to foreclosure or selling at a huge discount, you may want to rent your home in this growing renters market. As less qualified buyers look at more homes on the market, your options may be leading you to this solution.
Let’s look at some pros and cons of renting versus selling.
Renting – pros
- renting your home prevents selling now at a loss or losing your home to foreclosure
- renting your home “should” cover your costs of ownership so you can move on without the concern of that overhead
- renting, over time, “should” create an income stream for you and your family
- someone else is paying down your mortgage
Renting – cons
- Tenants could damage your property. We hear this concern a lot but, fortunately, it never deterred us. 95% of all tenant “damage” is normal wear and tear and the costs to maintain a rental property are, over time, much lower than the value gained.
- If you continue to try to sell your home while tenant occupied, it could create challenges.
- It may be more difficult to rent out if potential tenants know that potential buyers will be walking through and the house could be sold out from under them at any moment.
- The money you make from the sale can be applied to the new purchase.
- No tenants to worry about.
- You may have to sell at a significantly reduced price, even a loss.
- You eliminate potential gain in value when the market turns around.
- You give up the opportunity for income and to have a tenant pay down your loan balance.
Should you decide to rent out your home but you don’t want to deal with tenants on your own, contact a local property management company for assistance.
What did you decide?