Is It Better to Rent or Sell?

It’s one of the most common questions in real estate – should you rent out or sell your home? Maybe you recently inherited a property, and there are significant financial and emotional factors at play. Or maybe you’re moving into a new place, and you’re not sure whether it’s worth it to keep your old home or not.

The good news is that you will benefit no matter which choice you make. Owning an extra property to sell or rent is a great situation. The question is how you will benefit.

So, which is the better choice for you – renting your property or selling it?

Benefits of Renting Out Your Property

If you decide on renting out the property, the prospect of becoming a landlord may seem daunting. You’ll need to learn about things like tenant screening, lease agreements, maintenance requests, and eviction procedures. It’s a lot of work, especially if you do it on your own. In fact, it can feel like a full-time job sometimes.

But renting your property does offer a variety of benefits, including:

Steady Monthly Income: Create a reliable revenue stream for years to come.
Property Appreciation: Hold onto an asset that may significantly increase in value.
Tax Advantages: Deduct expenses like repairs, management fees, and depreciation.
Flexibility: You can always sell later if circumstances change.

If you want to avoid the day-to-day maintenance that comes with renting a property, you can team up with a property management company like Zenith Properties. We take care of everything, from marketing and screening to maintenance, customer service, legal help, financial reports, and more.

Need help deciding? Find out how much it could be worth – get a free rental analysis.

Will renting my house generate cash flow?

Your expenses will vary, but here are some to consider:

Mortgage
Insurance
Maintenance
Property taxes
Repairs
Reports (credit checks and background checks on tenants)
Marketing and advertising
HOA fees (if applicable)
Property management fees (if applicable)

Your rental revenue may not cover all of these expenses, but ideally, it should at least cover your mortgage, insurance, maintenance costs, and taxes. To determine if renting out your home will be profitable or not. Add up all of the expenses and subtract them from the amount you’ll make from renting, including the tax breaks you’ll receive.

Benefits of Selling Your Property

Selling your property may make sense if you can’t afford to keep it or want to limit taxable gains. Also, if the cost and effort to maintain the property aren’t worth it to you, selling is a reasonable choice.

It’s not uncommon for people who inherit property from a deceased loved one to sell it because they can’t afford it. Federal estate taxes, state inheritance laws, and capital gains issues create complications. Add in the specific regulations of Washington or Oregon, and the fear of making a costly tax mistake can become worse.

The benefits of selling your property include:

Immediate Cash Flow: Get a lump sum to pay off debts, invest, or handle other financial needs.
No Ongoing Responsibilities: Walk away free from maintenance, property taxes, insurance, and tenant headaches.
Capitalize on Market Conditions: In markets like Seattle or Portland, you might get top dollar right now.
Clean Break: Avoid family disputes about who manages the property or how to split ongoing costs.
Tax Benefits: Step-up basis often means little to no capital gains tax.

Selling Your Property vs Renting It – More Considerations

Sometimes, the decision isn’t so clear-cut. You may have additional questions running through your mind.

Is property management right for you?

Owning rental properties isn’t for everyone, but it’s a great investment for the right type of person – and owning your first rental property will help you become acclimated to the industry and is a stepping stone to expanding your portfolio.

Are you someone who’s always wanted to own a rental property? This is a great opportunity to find out for sure and experiment as an investor. Since you already own the home, you won’t have to take out an investor loan, which typically requires higher down payments and has higher interest rates. Plus, if you find owning a rental property isn’t something you enjoy, you can always sell your home in the future.

Being a landlord has tax benefits – but selling it might, too.

Owning a rental property also comes with some great tax benefits. These tax deductions and depreciation can help offset gains and losses elsewhere.

But because of the step-up basis, selling it can also be beneficial to your tax situation. Everyone’s tax picture is unique, so we recommend speaking with a tax advisor for more information on your specific situation.

Consider the market.

Think about the long-term picture of whether you want to sell it eventually, and if so, when. If there’s a good chance your home will increase in value, renting it out will allow you to keep the home and pay the mortgage.

Do you plan on returning to the area?

If you’re moving to relocate, renting out your home can provide you with some security, allowing you to move back to your home if necessary. It’s also cheaper to rent out your home and move back than it is to sell your home and purchase another one.

I just inherited property from a deceased loved one. What should I do next?

When you inherit a property, you’re immediately thrust into what may be an emotionally difficult time – and a challenging financial decision. Check out our full-length article on what to do after you inherit a property for help navigating the next few weeks to months.

Should you hire a property manager?

Does learning how to screen tenants and staying up-to-date on laws and codes sound like too much of a commitment to you? But you also want to hold onto the property and rent it out in the meantime? You may want to consider hiring a property manager. Property management companies, like Zenith Properties, will handle everything that goes into renting your property. We do everything from marketing and maintenance to screening tenants and collecting checks, so you barely even have to think about it. In short, we take the hassle and stress out of being a landlord.

We know deciding to sell or rent your home is a big decision that you shouldn’t take lightly. If you have any questions about our services, please give Zenith Properties a call today.

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Should I Rent or Sell My Property?