Should I Rent or Sell My House?

rent or sell a house

Today’s hot market allows you to have a choice whether to rent or sell your property for a substantial profit if you need to move. But knowing when to hold and rent real estate or outright sell for profit might not always be easy. If you are on the fence on whether you should rent or sell your home, ask yourself these questions:

Do I Have a Low-Interest Rate?

If you do, consider renting it out. Over the last 40 years, mortgage 30-year fixed interest rates have steadily declined. But it wasn’t until 2021 that Louisiana homebuyers saw interest rates dip below 3%. With the average 30-year rate dropping down to 2.96%, it is no surprise that property owners are reluctant to sell, even if they can afford to move.

However, renting out your home to a good tenant is always an option. When you rent out your home, your mortgage interest rate for that property will remain the same, meaning a higher portion of a tenant’s rental payments is considered a profit.

What is the Market Rental Price for My Property?

Determining a rental price for your unit is more than searching for comparable units in the market. You have to consider these additional factors when renting your property and make sure that the market rent is enough to cover these costs:

  • Mortgage interest and principal
  • Homeowner association fees (HOA)
  • Home insurance and taxes
  • Maintenance and replacement costs
  • Vacancy rate
  • Advertising costs
  • Property management fees

Unit vacancy rates are typically calculated to be 5%, which, over time, will be enough to fund a few months of rent while in between tenants or completing property renovations. If the rental rate is lower than your expenses, it might be best to consider selling your property and using the equity to leverage another real estate transaction.

What If My House Sells For a Lot?

Real estate prices increased across the country during the pandemic, causing many owners to jump at the opportunity to cash out on the equity on their property. But just because your home sells for a good price does not mean that it’s time to sell.

While owing nothing is ideal, real estate investment is intended to be a long-term hold, allowing for the profits to increase over time until the mortgage is paid. Every time you make a mortgage payment, you increase your property’s equity by a small amount.

Many landlords, especially those with a lower mortgage interest rate, will see profits each month, allowing the money to be used for leveraging other investments, paying off debt, or paying the mortgage off sooner.

Ready to Rent Your Property?

Having tenants may come with added responsibilities, but it also comes with the chance of earning passive income, owning a valuable asset, and the ability to use it as leverage for future investments. If you do not want to manage your rental, that’s okay! In fact, many property owners hire a property management company, like Kajen Rentals, to oversee their tenant’s and property’s needs.

If you are in Monroe, West Monroe, Bastrop, or Oak Grove and have questions about whether renting your property is right for you, contact Kajen Rentals today. We are happy to help.