Sell Home or Keep It as a Rental? What’s the Verdict?

If you’re moving out of your house, for whatever reason, you need to figure out what to do with your property. Should you sell home or keep it as a rental? The short answer is that your decision depends on your finances and the local housing market. However, it warrants a more serious consideration of facts and costs. If you’re on the fence about selling versus renting, we’ll try to make the decision easier for you. Here are some key factors to think about, including the costs involved.

Top reasons when renting a home makes more sense

When you’re moving away temporarily

If you’re only moving for a short period and plan to come back, renting your home out might be a smart move. It gives you peace of mind knowing you have a place to return to. Plus, when you consider closing costs, it could be cheaper than selling and buying another home later.

When you want a good rental income

Extra income is always nice! If you rent your current home and want to buy another one, remember that loan lenders will factor in rental income when deciding on your mortgage. However, make sure you’re financially ready to juggle two mortgages.

If you’re anticipating a high rental demand in your area

Is your home in a popular neighborhood, a great school district, or near cool amenities? High rental demand can make renting out your home less stressful. A good way to see what similar properties are renting for is by checking out the local rental housing market. You can also talk to a realtor or property management company to get a sense of the rental demand in your area.

If you’re hopeful of home values rising

While no one can predict the housing market with 100% accuracy, you can make an informed guess. If you think your home’s value will go up in a few years, renting it out now and selling later could let you cash in on the price appreciation.

Top reasons why selling a house is a smarter choice

When you want to buy a new house

If you need the money from your current home to buy your next one, selling is the way to go. You can use the net proceeds from the sale as a down payment on your new place. Since buying a new home while selling the old one can be tricky, make sure to work with a seasoned real estate agent to guide you through it.

If you qualify for capital gains tax exemptions

One compelling reason to sell your house is if you qualify for capital gains tax exemptions. This exemption can save you a significant amount of money, making selling a financially savvy decision. If you sell your home for a profit, you might be able to exclude up to $250,000 of capital gains from taxes (or up to $500,000 for married couples filing jointly). To qualify, the home must have been your primary residence for at least two of the last five years, among other criteria.

This exemption can provide substantial tax savings, giving you more financial flexibility for your next home purchase, paying down debt, or investing in other opportunities.

If you hate the idea of being a landlord

Being a landlord can be time-consuming and challenging. Are you handy enough to handle repairs? If not, do you have a network of affordable, reliable contractors you can call on? Think about whether you want to take on the responsibility of managing a rental or pay someone else to do it.

When your house sale is sure to make a significant profit

Home prices have risen a lot in recent years, and depending on how long you’ve owned your home and your local market, selling could bring in a big profit. It’s best to check out recent sales of similar homes in your area to see what you might expect.

What are the total costs of renting out a home?

You’ll still be responsible for your mortgage payments. The rental income might not cover it entirely, and you’ll need to pay property taxes as well.
Landlord insurance, which covers property damage and liability issues, costs about 25% more than standard homeowners insurance, which you’ll also need to maintain.
You need to plan to spend at least 1% of the home’s value annually on routine maintenance and unexpected repairs – more if it’s an older property.
Finding a tenant can be challenging. Marketing your rental might include advertising costs. And, you’ll need to pay for background and credit checks.
When the property is empty between tenants, you won’t have rental income but will still need to cover the mortgage and other costs.
If you hire a property management company, expect to pay them around 10% of the rent. This property management fee covers managing tenants, maintenance, and other landlord duties.
If your property is part of a homeowners association, you’ll have to cover HOA fees, which can vary widely depending on the amenities offered.

What are the total costs of selling a house?

Prepare to pay the agent commissions. Generally, real estate commissions are 5-6% of the sale price. And, is usually split between the seller’s and buyer’s agents.
To make your home more attractive to buyers (and possibly fetch a higher sale price), you might need to invest in home improvement projects such as landscaping, deep cleaning, necessary repairs, and professional staging.
Home sellers typically pay certain closing costs beyond agent commissions, such as real estate attorney fees, transfer taxes, and title insurance. These costs can add up to a significant amount.
If you still have a mortgage on the home, part of the proceeds from the sale will go toward paying off the remaining loan balance.

Sell home or keep it as a rental: Key takeaway

Choosing between selling your house or renting it out depends on your financial situation. For example, if you need quick cash, have future housing plans, or if you need the money for your next home, selling might be the best bet. On the other hand, renting it out could be a smart move if you’re looking forward to a steady income.

We’ve given you the primary reasons why each choice can be beneficial to you. Keeping those in mind, evaluate your financial situation, market conditions, and personal preferences to make the best decision for your circumstances.

Should I sell home or keep it as a rental: Points to ponder was last modified: August 7th, 2025 by Ramona Sinha

Written by Ramona Sinha. July 2, 2024

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.