One of the most critical decisions homeowners face when moving to a new home is deciding whether to rent their existing home or sell it. Many factors play into this important decision.
These are a few factors to consider when deciding what to do.
Do you need cash?
If you are buying a home, you will probably need some cash to make the downpayment. Most homebuyers make a downpayment of about 17% on a new home purchase. If you do not have enough savings to cover the downpayment, you may need to sell your home to raise the cash.
Do you want to be a landlord?
Managing a rental property is not as hands-off as many people imagine. You must find and vet renters, deal with repairs, collect payments, handle disputes and sometimes evict tenants. You can hire a property manager to do this for you, but doing so will reduce your income from the rental property.
What is the market like?
If property values are high in your area, you might be better off selling your home rather than risk hanging on to it and selling it after the market has cooled off. However, if property values are down, the opposite could be true. Renting the property could net you some income while you wait for property values to go back up.
There is no one right answer when it comes to deciding whether to rent or sell a home. Each option comes with potential opportunities and risks. Weighing the benefits against the risks and considering your individual needs should guide you in the right direction.