Sell My Home or Rent it Out

Deciding whether to rent out your home or sell it depends on your finances, long term plans, and tolerance for being a landlord. Renting can offer several strategic advantages while selling can offer major upgrade capabilities.

I do not care what the market is, people will always need to move for one reason or another. At the time of writing this, we are in a buyers market - leaving sellers sketchy on their future plans. There is already a surplus of inventory on the market. How long will my home sit if I list it? Will anyone buy it at all? Should I just rent it out? These are questions I’ve been receiving in recent sellers consultations. So let’s explore your options together.

Sell Your Home

I’m not speaking to my investors on this one, nor anyone who is looking to free up the equity they have earned in their homes (there is another strategy for that). I’m speaking to homeowners who are simply looking to change residences to either rid themselves of a mortgage or upgrade.

I suggest selling your home if we are upgrading and do not want the mortgage to be too outrageous. Generally, the profits from your first home will allow you to place a significant deposit down on your next home thereby keeping your mortgage much lower than a traditional deposit allow.

Example: You purchased a home in 2020 for $400,000 with a 10% down payment ($40,000). Since then, rising home values and regular mortgage payments increase your equity. By now, the home might be worth about $620,000 while the remaining loan balance is around $340,000, leaving roughly $280,000 in equity. When you sell, that equity can largely convert to cash and be used as a down payment on a more expensive property - let’s say a $900,000 home. You avoided the need to save that full down payment from income and your mortgage will be significantly lower than what a 10% deposit would have allowed. Thereby keeping you a comfortable monthly payment with a larger asset.

Maybe you want to withdraw from paying a mortgage all together. Then you have two options. Take your sale profit and walk away or buy another home in full cash with that profit. These options are reserved for someone who generally is not looking to capitalize on that profit.

Give Your Home the Best Advantage

There is a ton of homes on the market and not enough buyers - this is what defines a buyers market. Sellers who are moving just want to get their profits and go to their next home. So how do you make your home stand out if you are going to list it? You do not cut corners! Your realtor has seen and sold a plethora of homes. Your realtor has done their homework, they have scoped out your competing homes and understands the data of the neighborhood. Allow them to walk through your home with that intel in mind and point out what changes will set you above the rest. Trust that data and execute the changes. A buyers market is not the time to slow roll the full beauty and capabilities of your home. You usually get only one shot to make your first impression.

It is even more so important that you do not overprice. It is imperative that you list where the data suggests otherwise you miss the most important window of opportunity - when you very first hit the market. Follow your realtors recommendations on home appearance, fixes and certainly pricing. and you will be in the best position to beat out the competition.

Rent Your Home Out

Renting your home out is a great option if you do not need the funds from it to obtain your next goal. Renting allows the property to generate ongoing monthly income, which can help cover the mortgage, taxes, insurance, and maintenance, and may eventually produce profit as rents increase over time. Keeping the home also allows you to benefit from potential property value appreciation while tenants help pay down the mortgage, gradually building equity. In addition, rental properties can offer tax advantages such as deductions for mortgage interest, property taxes, repairs, and depreciation.

Renting can also provide flexibility should you decide to move back into the home in the future. I don’t care what your FYP is telling you, real estate is and has always been a hedge against inflation because while rent prices tend to rise, a fixed mortgage payment stays the same. This is why renting is a way to build long term wealth and diversify your income sources. Never forget though that it also comes with responsibilities such as maintenance, tenant management, and possible vacancy periods.

I hope this information brings you some clarity on the best decision for you. If you need a more personalized conversation, I’m happy to discuss your options with you. Make an appointment here. Speak soon!

Erika Walker

Maryland Realtor®

443.468.0757 (c) 

443.233.6156 (o) 

Realty One Group Excellence 

9433 Common Brook Rd Ste 201                     

Owings Mills, Md. 21117