6 Factors to Consider When Deciding to Sell Your Home or Rent it Out

by | BiggerPockets.com

I get the question a lot: I am thinking of moving or upgrading… do I rent or sell my home?

That question is really loaded. A simple yes or no answer doesn’t really do the question justice. Honestly, anything shorter than an article really can’t answer the question and does you the questioner a disservice.

Therefore, this article is for all of you who have thought, asked, or wondered about this conundrum.

Before We Get Started

Let me preface this whole discussion by saying: It really depends on YOU! No matter what is said in this article — or any other forum, newspaper article, etc. — at the end of the day, it is what YOU are comfortable with and willing to do. Think of it like stocks: while you can make a killing in the penny stocks, you have to be comfortable with your financial decisions — because at the same time, you can lose your shirt!

Related: Single-Family v. Multi-Family Homes: Which Should I Buy as a Rental Property?

Any investment that entails the use of a “vehicle” to obtain your dreams is going to have its up and its down days. If you don’t fully believe and aren’t invested in it to succeed, you will be not be a successful landlord. Going into this half-hearted means you won’t be willing to go the extra mile to stay out of landlord trouble, deal with tenant stress or any of the other wonderful “consequences” that come with being a landlord. On the other hand, if you choose not to go in this direction, you won’t be able reap the amazing rewards that come with being a successful landlord.

Lets Get Started: Do I Rent Out or Sell My House?

Here are some questions you need to ask yourself:

Are you willing to be a landlord?

Landlording isn’t fun, and it definitely has its moments. For us, they have only been in the form of emotional, not financial, stress. That is draining and never seems to be at a good time. We have had tenants break lease during a move, right after my husband deployed, and we’ve had a house leak during our vacation — to name just a few of the “fun” situations of landlording. While the rewards have been amazing, they are slowly realized, so patience is a must.

Are you going to make a profit or bring money to the table?

If you bring a profit to the table, make sure you have assessed the true profit after real estate agent fees and capital gains. If you are bringing money to the table, make sure it is an amount that is worth it to you!

What is the TRUE cost of bring money to the table?

Frequently, I see BiggerPockets members calculate the costs of having a home based on vacancy, management, and maintenance costs. If the only reason you are selling is for monitory purposes, make sure you are looking at the costs. While long term you might have vacancy and management costs, I have been able to eliminate these costs. My houses’ margins are $120-$450 a month, and I have NEVER had to raid my pocket to pay for anything. So before you shell out $40,000, figure out how long it will take you to break even! It might not be as bleak as you think. Remember, if you can afford it, there is nothing wrong with trying the rental thing and then selling it if it doesn’t work out.

For example, if you are losing $100/month, that’s $1200/year. If it costs you $40,000 to get rid of it, it would take 33 years to break even. That’s a lot of “extra” cost that would have to appear to make it worth the $40k! Plus don’t forget about deprecation and other tax “credits.” Just food for thought!

Are you looking for cash flow or payout?

Life requires flexibility; business success requires a plan. Create a plan that reaches your long term goal. Our long term goal is early retirement for 15 years. While our plan when we started 3 years ago looks NOTHING like what we are doing today, we still are on path for our goal!

Do you have a better place to invest the proceeds?

Congratulations, you can make $20,000 if you sell the house! Now for the hard question: what are you going to do with it? I could sell all of my houses for a profit, but I couldn’t reinvest them into other assets that give me the same return long term. My goal is long term cash flow for early retirement. So before you sell, make sure you have an reinvestment plan that maintains your LONG TERM goals.

Related: What Yields a Higher Return: Selling Now, Selling in a Few Years, or Refinancing?

Is the area depreciating or appreciating?

I recently sold a house for family and 1031-ed it into 3 houses in California. The area was depreciating. The house was older and had an oversupply of brand new condos for rent. While the sales market was still in a good place, it wasn’t going to be there forever. So this was the perfect time to jump ship.

Look at your market. Where do you see it going? If you see the writing on the wall, this is the time to leave.


I am buy and hold landlord who has turned personal properties that are highly leveraged with low margins into great rentals. So of course I am biased when I advise someone to keep their house as a rental.

Just remember that once you have a mortgage, it’s yours; there is no re-qualifying later. If you sell now, you have to re-qualify for the new house. While you might qualify for a new house, you might not qualify for 2 new houses. Rates are not at the lowest they have been in history, so if you have some of those amazing 3.125% rates, you might not want to sell. Just remember: look at EVERYTHING before you decide to sell!

Weigh in: What questions would you add to my list? What do you consider when trying to decide whether to sell or rent?

Leave me a comment below!

About Author

Elizabeth Colegrove

Elizabeth Colegrove is a passionate "buy and hold" investor who specializes in turning her once-negative transient lifestyle (Military) into a positive lifestyle. She self manages her entire real estate portfolio from long distance while holding down a full time job. When she isn't finding new real estate deals, she enjoys traveling, hanging out with her awesome boat-building husband, playing with her mischievous kitty, or writing on her newest project, her blog.


    • kenneth kussman

      I recently bought a second home and am renting out the first home. I want to buy more homes while I am still working and bringing in a good salary.
      My question is how you manage the financing?
      I own the 1st house myself (Has mortgage), I am 50% owner of the home I live in now.
      How can I get financing for the 3rd house?
      My mortgage broker said in one year I will not have to factor the second home in my dept ratio but that’s 11 months away. I want to buy a fixer now to fix up and rent out.
      I am a buy and hold all the way, so selling any property I own is not an option right now.

      Any comments ?

  1. Charles Williams

    Hey Elizabeth. Great article. I started out thinking that flipping was the way to go but now have realized the buy and hold strategy is the best for me. My business partner and I manage all our properties ourselves. Our financing has dried up with our local bank we use. The only reason we would sell one of our properties now is to open up that financing for us so we could buy another property that would bring us more cash flow. In just over 2 years we have managed to acquire 17 units. Now we must dig deep and figure out a way to keep this thing going. How many units do you have?
    Charlie- VA

    • Elizabeth Colegrove

      17 houses in 2 years, wow that’s amazing! We personally have 5 houses in addition to the 4, I manage for family. We are on track to add 3 more houses to our portfolio by July.

      I definitely understand the constraints of financing. We are planning on using conventional financing till we max it out at 10 financed property per name. I have not found the next best financing source. When you come up with a solution, I would love to hear about it!

  2. Timothy Trewin


    Great article and good job bringing up points that some might not have thought about. I think that the long term benefit of owning buy and hold properties outweigh the short term gains from flipping. Now where flipping pays off is if you can make a large profit and utilizing those profits to buy multiple buy and hold properties. For those trying to retire early I can’t really think of a better way to go then with buy and hold. Thank you for taking the time to write this article.

  3. Elizabeth, I liked your article especially since I am a newbie looking to go full time with a combination of buy and hold and flipping. My dilemma is my home will rent for my mortgage payment and probably not much more. My wife is a RE agent so I could save a little on selling costs but I’m not sure if it’s worth it to hold a property that’s not cash flowing very much. I’m looking for at least 200 per door to make it worth my time. If I sell I will only make about 10000-15000. Any thoughts?

    • Elizabeth Colegrove

      Jason, Glad you liked the article! Everyone has their own opinion on what is “worth” there time. I love personals because of the unusual low down payment requirement when compared to “pure” investments. I know we put 0-5% in our personal properties. So that $100-$200 a door is a “huge” return on investment. Especially since a 10-15k profit won’t provide the long term cash flow my early retirement goal requires. We specialize in turning these low profit per door into a strategy. While for us it has taken much longer, we are slowly seeing it add up, so for us it is worth it! So honestly, it come down to what is worth it to YOU!

  4. Craig Wilcox

    Some very good points Elizabeth.

    We purchased a 5 year old townhouse to live in at the beginning of 2007. We bought it at a good price but the recession put us underwater when we wanted to move out of state 3.5 years later. We rented it for years, long distance, with around $100 negative cash flow. Since it was newer we had very few repairs needed and it was not too difficult to rent. After the last tenants dogs damaged the woodwork and carpet we decided to sell it after putting in new flooring and painting.

    In the end we had around $4,000 total in negative cash flow and a $5,000 capital loss but that was much better than the $25,000- 30,000 loss we were facing in 2010.

  5. Mike S

    With your primary residence I think the biggest factor is do you need the equity from the sale for the down payment on your next house? If not and you can rent it out, do it.

    Most people can probably cash flow their house. Maybe not a whole lot, but some. Plus most people probably live in an area that will appreciate. In an almost worst case scenario, in 15 to 30 years you’ll have a paid for asset of several hundred thousand dollars that someone else paid for.

  6. Hi there, I could really use some advice…
    We are making $700 a month off our rental and once the PMI drops in approx 1-2 years we will be making $900 mo. Although this sounds great, the house is over 100 years old and at the very least will need a new roof very soon. The market where I live is crazy right now and I could sell for way more than I owe on it profiting approx 200K. I love owning property and would eventually like to have multiple rentals and try to flip homes. My question is do I keep this home and pay for the new roof and any other needed problems or sell and invest in more properties, or sell and pay off the house I live in allowing us to be debt free so we can save up for another investment property. Any advice would be greatly appreciated. thanks

  7. There seems to be two parallel tracks in making this decision, the money track and the personal/emotional track. I nodded vehemently when you began the article with the idea that each of us has different needs and abilities, and there isn’t one right answer. Going through the selling process if you don’t need the next down payment might not be worth it; in any case, you have to find out if your house is going to make you a profit. Renting, though, is not always something you can do for a while and change your mind. I’ve known great owner/tenant relationships that were win-win until the owner sold, at an excellent time in the market for him. And I’ve known complete tenant disasters that cost the owners time, money, and gray hair, not to mention going to court. A great overview for at least getting the number and why you need them is at https://www.homelight.com/blog/pros-and-cons-of-renting-your-home/. What will give your natural hair color its longest life is up to each owner!

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