Over the past few weeks, we have been going back and forth about what we want to do with the home we currently own in Missouri.
I realize I say this all the time about everything in my life, but I am an extremely indecisive person.
This decision has been a difficult one so far, and we are still leaning either way depending on the day.
There are many reasons for why we are undecided about what to do next as well. So, what should I do? Should I rent or sell my house?
Below are some of the reasons for why we keep going back and forth about whether we should rent or sell our house:
We love our house again.
We’ve been fixing it up and have been slowly falling back in love with it. I know, this isn’t a good enough of a reason to keep a house and it seems like we are just coming up with excuses to keep it.
Some of the things we’ve done in the past few weeks include:
- The whole upstairs and downstairs have been completely professionally painted. Trim, walls, doors, etc. and it all looks so much better now.
- We’ve replaced a light fixture with something much nicer.
- We fixed all of the curtain rod placements to make the windows look bigger.
- We’ve bought new curtains.
- We’ve deep cleaned the whole house.
- We replaced the broken garage door with a nice carriage door.
- We replaced our back door with something nicer as the last one had a cracked door frame after someone got locked out of our home.
All of these improvements have made us wonder a little more about what we should do with our home. We know we should probably just get rid of it and sell it, but the fact that it looks so much better than before definitely hurts a little!
I realize this is normal though when someone goes through preparing a house to be put on the market.
Our neighborhood’s value has tanked.
I’m not sure what has happened, but our neighborhood’s value has tanked significantly over the past year.
Our realtor already told us that we most likely either breakeven or we will owe a little money after selling our home because of realtor fees and the lower value of our house, so this is playing a big factor into whether or not we want to put our house on the market at the moment.
There is risk with this though. Our home value could continue to plummet. I doubt that would happen as it seems like the plummeting has stopped, but you just never know.
We could turn our home into a rental.
One factor that’s throwing me in a loop about whether I should I rent or sell my house is that we could potentially rent it out for the time being.
We are debating renting out our home, either on a long-term or on a short-term basis. Renting would be great because we could see if our house increases in value over time, while hopefully earning enough money to still pay off our mortgage each month. Another positive of this is that we would have a home to return to if we decided down the line that the move was not right for us.
A long-term rental would be nice because we would earn enough to cover our rent with hopefully minimal work involved.
On the other hand, we could also do more research into renting out our home on a short-term basis on a website such as Airbnb, VRBO or Homeaway. This would also allow us to have a place to come back to since we know that we already have to be back in the St. Louis area at least four more times this year.
Having a rental would require work.
In the end, we will probably just sell our home. However, if it sits on the market for a long time then renting it out will probably become more appealing.
Keeping our home on the side most likely wouldn’t be worth it. We would mainly be keeping it for all of the wrong reasons, mainly just that we are attached to the first home we bought.
What would you do in our situation? Should I rent or sell my house?
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Thanks!
Yeah, same here!
Over here property is considered a no brainer investment. Prices have always tended to rise over time in the UK (with some shorter term corrections).
If you can find a good agent to manage it for you and you can obtain a rental income to cover the current mortgage plus some extra for maintenance, then it can be a brilliant investment for the long term. Essentially someone else is paying for it, and you get the benefit down the line.
If you can do the above, and have sufficient income to cover the mortgage plus your new rent in the times when it is empty then I would say to go for it, especially if you believe the market has hit bottom in your area. I understand the people who say that being a long distance landlord can be difficult, but that’s why you need to find that good agent.
I don’t know about in the US, but in the UK you need a special mortgage if you are renting the property (called a Buy to Let mortgage), rates are usually slightly higher than a ‘normal’ one. You also need landlord insurance etc. Flip side is that the maintenance can be offset against the income for tax. You need to find out if any of this is relevant to you but make sure you understand ALL of the potential plusses and minuses before making that decision.
On the flip side, if the rental is only barely going to cover the mortgage, then the safe bet is to get it sold.
It all gets more tricky if it sits empty for any length of time of course 🙂
Thanks for this. Lots to think about 🙂
You have a tough choice ahead of you. It sounds as though you have gotten your house ready to sell with all of the work you’ve done. If it were me I would try to sell for a price that I wouldn’t lose money. If it doesn’t sell, then I would rent if the rent would cover all costs.
When we sold our duplex, a huge weight was lifted off our shoulders. No longer did we have to worry about two pieces of property. If the situation was right, we would own rental property again though.
Yeah, it’s definitely tough 🙁
We’re in kind of a similar situation! It’s definitely hard to sell my house now that it’s exactly the way I want it. Makes me sad that I couldn’t have done all this while I was actually living there! The home prices in my neighborhood were recovering, but now they’re starting to decrease a little again. The main reason being that most of what is listed/recently sold is foreclosures, or houses that need extensive work. It’s great for the neighborhood that things are being bought and fixed up, but it has a negative impact on current comps.
My decision has been that if I can at least come within a couple grand of breaking even, I’m going to sell. I could easily rent it out and wait to see if prices come back up, but any profit would basically go back into fixing the house up to sell again down the road. And I would be broken hearted to see someone destroy all the hard work I’ve put into the house!
Yes, I wish we would have made all of these changes awhile back!
I had the same issue when we moved from Kentucky to California. We actually didn’t have enough time to prepare our house to sell, so we went the rental route. A real estate broker we knew also offered property management services. They do all the work to find the renter, collect rent and take care of repairs. We pay them the first month’s rent and 10% all other months. We have had two good renters sign year long leases, but we also had someone sign a lease and then stop paying rent. That was a headache.
We continue to use the house as a rental as the market prices there are lower than when we bought it. We did put it on the market for an entire year after we had to evict the deadbeat renter and the only offer we received would have been a loss. At that time, we were stuck paying the utilities and the mortgage on the empty house. At least with a renter, we have the utilities paid and the mortgage pretty much covered. We’re hoping the market will rebound and if it does, we will reconsider the situation then.
In reality, as long as the property manager does due diligence on any potential renters you may be better off renting your home as opposed to taking a loss. If the market is slow you may be stuck paying the carrying costs for quite a long time and renters will help you recoup that. But there’s an emotional aspect as well and it may be worth it to take the (potential) loss and not have the headache of dealing with it or something back in Missouri weighing on your mind as you guys are starting your new life in Colorado. Whatever you decide to do, good luck!
Thanks Jessica! So much to think about.
This is a touchy subject for me We just had to sell our house because of trashy neighbors that had moved next door and had a lawsuit with them & the city and so on I could talk for hours but you’d have to give me a call 😉 I cant type that much it hurts my fingers BUT I really REGRET selling my house (but i had no other options unless I wanted to rent and in my area that can spell trouble) but I really cry when I think about selling my house so if you LOVE your house like I did Don’t sell maybe get ahold of a rental company to rent it a little less $$$ but a lot better more reliable renters and you don’t have to deal with anything
Oh no! That really stinks Linda.
Yeah, it’s such a tough decision!
I can see the struggle! The only thing I would be concerned about rental wise is being a long distance landlord, but you could always get a property management company to manage for you locally.
This is an interesting article pertaining to short term rentals: http://affordanything.com/2014/05/27/the-airbnb-experiment-how-much-did-i-make/
Yeah, a long distance landlord would be somewhat difficult, but we have thought about different plans that would work just fine. We plan on putting the house on the market first and seeing what happens.
I agree with almost everyone in the comments! I’d say sell to have the separation. Keeping a rental house that is so far from your new home would be challenging. I’m all for cutting the cord and really starting your new adventure fresh and new!
I think that’s what we are going to try to do first 🙂
It might be worth asking a management company for a market analysis of what they expect the could get in rent. Let the numbers tell you the answer. So very difficult, but try to take the emotions out of your financial decisions… In the end, you’re not the one that will be living in the house that you now have fallen back in love with. Sure you could return to it, but life changes very quickly. I wouldn’t bank on coming back to it.
Great idea!
Sometimes you need to let everything go as you move towards a new direction. I think that it is possible to be a long-distance landlord but I think you would need more time to set ups systems effectively. Also, I wonder if you would be able to really make enough in rent to make having a renter worth while? Just go for a hike and think about it.
I definitely think we could make enough in rent to cover our mortgage and still make extra money. It’s just the possibility of someone destroying the place that would suck.
I do not envy you having to make this difficult decision. But you know what they say…when in doubt! Perhaps you should just hang on to it for the time being until you feel more confident in deciding to sell. The only thing about renting it out…do you have someone that could oversee the property while you are in another state…for such things as maintenance issues, etc.?
Yes, we have people who could oversee the property with no problem, and that is why we are thinking about doing this option.
Michelle, you really have to think this over. You know, we don’t want to regret it later one. In my case, I have to sell my house because I don’t want the location, amenities, and others matter like the neighborhood. We’ll have to move in another house for a better opportunity and where we can save much money like by being near from work and schools of my kids. Good luck Mich.
Thanks!
We rented out our home of 25 years in 2008 when we hit the road to travel full time. The real estate market was in the tank and we couldn’t get a buyer as soon as we wanted to, so we thought we had found a better option, and once the market went back up, we’d find a buyer at the price we wanted. We also thought we had found good tenants who were treating the house as we would. We traveled all over the country and went back to “visit” our beloved “home” once a year, and it looked good. Two years in, we decided to put it back on the market so we could still make the cut off for the capital gains exclusion (you have to live in the house for 3 of the last 5 years, or you’re subject to capital gains on any profit above the cost basis). Oddly, we never got a single bite from a potential buyer, and didn’t know why. Six years later, after super storm Sandy left 3 feet of water in the basement, and our “wonderful” tenants tried to extort money from us or they would blow up the closing on our sale, we found our from our old neighbors how our tenants were frightening off buyers and ruining the house! We were fortunate to be able to sell at all, at a fraction of what we were asking for 6 years earlier!
Unless you really have your hearts set on becoming landlords and plan to hire a management company, since you live far away, and can afford the risk of having the house empty for long stretches, you are much better off selling, even if it takes time. Otherwise, you will be turning a house you are emotionally invested in into a purely business investment property, and that’s much easier said than done!
Yes, we have a lot to think about. I wonder what will end up happening 🙂