The Landlord Lens - Should I Rent Out My House or Sell It?

Episode Date: January 17, 2025

Thinking about whether to sell or rent out your home? In this video, we break down the pros and cons of both options to help you make the best decision for your situation. Whether you're looking for extra income or ready to move on.

I'm Jonathan. This is Krista. We're here to help you be a better landlord. Okay, so today we are going to try to answer a question that we're hearing a lot lately, which is should I sell my home or rent it out? It is a really good question, especially right now. The Fed dropped interest rates by about 50 basis points in September. They are slated to continue dropping. Of course, we will see how the presidential election factors into that. But for the first time, homeowners are saying, hey, these golden handcuffs are, are loosening, should I sell my property? Should I keep it? What are we going to do? Yeah, all indications are pointing to actually want to move again. So should I rent out my house

or should I sell it? What are your thoughts? You personally? I would say. Me right now. Let me teach you six things you should really consider it. Okay, six things. Let's go. All right. So first and foremost, you're going to want to think about your actual plans. you're also going to want to consider if you need the equity for something else, you know, if you're looking to buy another property. Hot tubs. Hot tubs.

Those are hot commodity. Then I want you to focus on your property's features and if they are rental ready. Also, your local market. What's it looking like? Then your property's location and, of course, your actual banquet. So we will jump into all of those topics so you have a good idea of what you should do next.

Okay, awesome. Let's start with homeowners plans. Why do those matter? Well, plans are the things that drive us in life. Is that so? It's true. I know, revolutionary. But really, you know, sometimes someone has their primary residence and maybe they are just moving temporarily for work and work is covering their next bit of housing, whether that's a rental or probably rental if your work is covering it. Or maybe you are permanently moving across the country. You really need to consider if you need to return to that property. Because if in the future you want to come back there, maybe it's your hometown, maybe you have a lot of family there. It would probably be who you would probably be who you. to rent it out. That way you don't have to come back and try and break into the market when you've been away for some time. It saves you some work down the road and you can earn rental revenue at the same time. Makes sense? Yeah, pretty straightforward. I would also say if you are looking to move, but you want to keep your current property, there are a couple things you can do to make remote

landlording easier before you even leave the area, which is going to be mainly building up your network. So making sure that you have a local contractor that you trust, you know, maybe a local real estate attorney, CPA, things of this nature so that when you do make that hike to wherever your place is next, you feel really confident about who you have nearby. Yeah, that says. And whether somebody is selling or renting their home, if they're planning on moving out of the home, I mean, should they be thinking of renovations differently in either scenario? Absolutely. I would say, you know, really take an objective look at your property because whether you're trying to sell it or you're trying to rent it out, you need to be aware of any of the potential pitfalls and make sure that

it's up to code, right? Because if you have some things that you've just dealt with because you really love the house or you're really lazy, then you can't guarantee that a renter or even a buyer is going to come in and find the charm so overwhelming that they're willing to overlook those factors. So I'd say, take a very objective look at your property. If you want to get ahead of the game, you might even bring in an inspector to see and assess what kind of changes they would recommend. Of course, when you bring in an inspector, sometimes they reveal information that you then have to reveal to other people. So understand your local laws, maybe talk to a real estate agent as well, just to see what your options are. But if you need to make renovations, you probably need to make them whether you're looking to sell or whether you're looking to rent.

Yeah, I know inspectors look at things affecting health and safety. Obviously, that matters if it's going to be a renter moving in there or a new buyer. But things like handrails on stairs or loose stairs, either. These are important. You should take a look at these. And I know a lot of landlords also make some renovations for a rental, like not having a fireplace, not having a fire pit in the yard, not having a pool or a hot tub or, you know, things that could potentially lead to bad. Yeah, potentially to bad. It's so true. If you are keeping any kind of connection to the property by being a property manager or landlord, you really want to think about any kind of long-term liability plays and trying to correct those before you start renting out the property. versus if you are selling it, you could leave your pool.

That might be a great feature for someone, and you don't have to worry about anyone drowning in it because it's no longer your property. Yeah. So keep an eye out. Again, getting an experienced real estate agent in the mix and having some of these questions answered for you is going to be a real boon in deciding if you want to sell a rent.

Absolutely. Yeah. And talking with your lender, too. I know from personal experience, lenders are great to just bounce ideas off of. They'll run the numbers. They'll look at if you were to sell, here's what you would make.

If you were to rent, here's ballpark what you could make. And this kind of leads into the next question, which is how should a homeowner think about their home's equity if they're deciding to rent it out? Ooh, so equity is definitely one of the biggest factors that you want to consider in conjunction with your plans. Because if you've been building up that equity, you could have a really sweet pot of cash in there that you might want to use for your next home purchase. However, if you're going to rent a new place in your new area, you might want to leave the equity and have it continue to build while having red payments cover your money. mortgage. So again, just think through what you want to have happen in the next two to five to 10 years and let that guide your decision because that equity is going to continue building in the long run. I mean, real estate is an asset that appreciates over a significant period of time. So if you can hold it and keep building it, great. If you need it for a HELOC loan or you otherwise just need to pull it out to make your next purchase, that's definitely something to consider. You'd probably want to sell it at that case or at least explore your options.

with your lender. Yeah, absolutely. And I know that my realtor sends me this HomeBot report every month. HomeBot, if you're not familiar, it's an automated thing. It uses AI, and it just kind of creates this report every month and says, here's what the equity you have in your home is. Here's how much you would get if you took a helo-he-lock out on it. Here's how much you would get if you sold it.

Here's how much you would get if you rented. And it's kind of a fun report to just sort of daydream and think through, like, what if I did sell and went somewhere else or rented it out? But we at TurboTenant also have a tool specifically meant for rent estimates. Yeah, highly, highly recommend that. We're going to link it in the description down below. That way you can understand what you might be able to secure for your property based on what other rentals are running for in your area.

We also found a really cool tool while researching this episode, which we will link below, which helps you understand basically what you could make if you rented out a property versus selling it. So this is a tool from the National Association of Residential Property Managers. we will link it below so that you can crunch the numbers around the impact of your decision. I will say before we wrap up this segment, if you are looking to purchase another property, but you don't need the equity from your first property to make that down payment,

usually around 20%. It's really nice to build equity in two properties at the same time. You will appreciate it. Again, in the long run, this is a long game. So just consider your options, look at the numbers, make a very informed decision. Absolutely. All right. So when thinking about renting out property versus selling it, how should you think about your home's features?

So going back to the idea of needing to do any kind of renovation, I just want you to take away all the emotion, all of the good memories of your house and look at it really critically as if you had seen it for the first time and you were deciding whether or not to move in. Because there are going to be some features that are particularly great for rentals, whether you're looking to rent out by the room or if you're just going to try and rent the entire space. Take a look at common areas, look at your backyard or any kind of outdoor spaces, and of course, things like access. So do you have a dedicated parking space? Is it street parking? Start to factor in what your home offers and line that up with the amenities that you see offered in similar rentals in your area. That will help dictate if you have good bones in there that you can build on for a rental or if this is better suited as a property you want to sell. Yeah.

And you already mentioned the comparable homes in your area. How does the local market plan is? Okay, it's going to be a really important factor. So once you've kind of chewed through your own plans, the equity that you might need, you're going to want to look at how your actual market is performing. Specifically, if it's a seller's market and you could make a lot of money, that's going to factor in for folks and help them decide, okay, maybe I need this money sooner.

I'm going to go ahead and sell. If it's a buyer's market and properties are sitting vacant for a while, they're going for under-asking things of this nature, then it would probably behoove you to hold on to that property until it is once again a hotter market to make the most value that you can. Yeah, makes sense. So in addition to how your housing market is playing out for buyers and sellers, I also want you to think about your property's location.

You know, if you are out in the boonies and there's not much nearby, the likelihood of finding a great tenant is going to be a bit lower than if it's in the city center or if it's close to like universities, hospitals, nightlife, etc. So one way to assess this is, again, just taking a look at local rentals and seeing if they are staying on the market very long. Also, if you see a lot of rent concessions being offered, whether that's like first month free or waived move-in fees or free pool access, I don't know. If you start to see those things being listed in mass, that means that property managers are having a

hard time landing tenants. And that is going to be a cautionary flag that you should consider when you decide whether or not to rent or sell. Totally makes sense. Yeah. And you mentioned property managers, I feel like this is a good way to sort of wrap up the discussion here, which is if you do choose to rent out your property, there is some work that needs to be done managing that property. So how do you recommend going about that? Being realistic about your bandwidth is going to help you be successful in the long run, whether you are looking to rent it out and become a landlord or if you're looking to sell it. Now, this is the point where people get really nervous, especially if they do not have experience in real estate or property management. But I would say there are tools out there like Terpa Tenet that will help you manage your rental from start to finish so that you don't have to have a degree in property management. You can come in, list your rental for free, you can find great tenants, screen them, use all of our features to make sure that you feel comfortable and can take on this challenge without being bogged down by some of the more tedious administrative work. So it is work, right? Real estate investment in being a landlord is a source of passive income, but you're still going to have to show up and do a couple things, make sure that you're communicating with tenants. TurboTenant makes it really easy to do that all in one spot, so please create a free account today, turbotenant.com.

Beautiful. Make that passive income truly passive. Do it. It's your time. Cool. Well, thank you for taking us through. Should I sell my home or rent it? If you out there have any further questions or you want to tell us how you decided to sell or rent your home, leave them down below in the comments. Don't forget to like and subscribe.

TurboTenant is the all-in-one platform for landlords to manage their rental properties. From vacancy to tenancy, we have you covered with industry-leading tools and expert advice. Landlord better from anywhere for free at turbotenant.com.