Should You Rent It Out Instead of Selling?
I get questions like this often. A homeowner lists their house, the days stack up, and the showings slow down. That moment of panic sets in, and the next question I am asked is should we be renting our home instead? It is a fair question, especially when you are emotionally attached to a home and want to keep your options open. But the answer is not as simple as flipping a sign in the yard and simply renting your home.
The Emotional Pull Is Real
In this particular case, a reader shared their story about a custom home on 25 wooded acres. The home is large, newer, private, and beautifully built with care and sweat equity. After 80 days on the market with no offers, they started considering renting the property. That makes sense emotionally, especially when you are attached to a home you built. But the shift from selling to renting your home is a big one, and it comes with both visible and hidden consequences.
Tenants and Property Condition
One of the biggest considerations is how tenants will treat the property. In my experience, even the best tenants will never care for a home the same way an owner will. That pristine landscaping you spent years perfecting? It is going to change. Garden beds may go untouched. Outbuildings may get used for storage in ways you never imagined. And when the lease is up, it is common for sellers to spend thousands of dollars on repairs, touch-up painting, and deep cleaning before putting the property back on the market.
Short-Term Rentals Rarely Make Sense
Many homeowners assume they will rent for just a year or two until the market improves. The problem? That short timeframe rarely results in a significant increase in home value. Meanwhile, you may have collected rent, but after taxes, maintenance, and wear and tear, you have likely lost money overall. If you are going to rent, you need to view it as a long-term investment, not a temporary fix.
Tax Implications Can Cost You
This is a big one, and it often surprises people. If you convert your primary residence into a rental, you risk losing your capital gains exemption. That means if you are single, you can typically exclude up to $250,000 in profit when you sell your primary residence. For married couples, it is up to $500,000. But that exemption disappears once your home becomes an investment property. Suddenly that short-term rental could cost you tens of thousands of dollars in taxes. Always speak to a tax professional before making this decision.
Local Laws May Create More Barriers
Some cities and counties require rental inspections before you can legally start renting your home. These inspections may trigger mandatory updates or repairs that were not needed when you were selling. Other areas increase property taxes on rental homes. You may also be required to register your home as a rental or hire a licensed property manager.
Selling Might Still Be the Better Option
Before shifting gears into the world of renting your home, talk to your real estate agent. Ask honest questions about your pricing, your listing photos, your marketing strategy, and the local competition. It may be as simple as adjusting your price or enhancing your marketing campaign. I have written other posts on how to have these tough but important conversations with your agent, which I recommend you check out The 3 Questions That Can Save Your Home Sale.
Need Help Thinking Through the Options?
If you are debating between selling or renting, I can connect you with a real estate agent who knows your market well and can help you make the right decision. I also have relationships with trusted property managers across the country if you do decide to explore renting. Let me know what you need, and I am happy to help.
