Advice Needed – Sell Now or Rent Our Minnesota Home and Re-list in Spring?

Question

Hello,

I would really appreciate some advice from anyone who has experience with real estate, whether in Minnesota or another market.

We have been trying to sell our home for almost six months. We have since moved to another state, so our goal is to sell the property and use the proceeds to invest in our new location.

We have already reduced the asking price several times. We have received feedback from buyers and agents that the home is priced appropriately for what it offers, but I think the biggest challenge is the smaller buyer pool for a home close to $700,000. We have had quite a few showings, but so far the buyers have ultimately chosen other properties.

Recently, one of our neighbors mentioned that her daughter might be interested in renting our home. This made us start thinking about whether renting it for approximately six months might be a better option than continuing to keep it on the market. We could potentially rent it out, take some time off the market, and then put it back up for sale in the spring when there may be more buyers.

At this point, we're trying to figure out whether this would be a smart financial decision or whether we would be better off continuing to try to sell it now, possibly with another price adjustment.

For those who have experience with real estate in Minnesota or anywhere else, I would love to hear your thoughts:

• Would you take a home off the market after this long and try renting it for six months?
• Do you think waiting until spring could significantly improve the chances of selling?
• What are the potential downsides of renting a home before selling it?
• What would be a realistic monthly rental price for a larger 5-bedroom home?
• Would you recommend a traditional 6-month lease, furnished/medium-term rental, or something else?
• Have you personally done something similar, and how did it work out?
• If you were in our situation, what would you do and why?

We don't want to make a decision based purely on emotion. We are trying to make the most financially sensible choice, especially since we have already moved and would like to free up the money tied up in the property so we can invest it where we currently live.

Thank you in advance for any advice, experience, or perspective you can share!

Michael Eskenasy · Answer

I think there are two separate questions hiding inside this:

Is this house worth keeping as a rental?

and

Should we rent it for six months because it hasn’t sold?

I would be careful about letting the second question answer the first.

Six months on the market with plenty of showings and buyers consistently choosing other properties is meaningful information. I know agents are telling you it is “priced appropriately,” and that may be true in an appraisal/comps sense, but there is another definition of appropriately priced: the price at which the market actually clears.

If qualified buyers have repeatedly seen the house, seen the asking price, and bought something else, they are telling you that the alternatives currently offer them more value.

That doesn't necessarily mean you need a massive reduction. It also doesn't mean spring won't be better. It just means I wouldn't assume seasonality is the entire problem.

The rental idea can still make sense, but I would underwrite it as an entirely new investment rather than treating it as a six-month pause button on the listing.

The number I would want to know first is not the monthly rent.

It is:

What is the expected net benefit of waiting six months versus selling today at the price that would actually move the property?

Suppose another $25,000 reduction gets the house sold relatively quickly.

That $25,000 becomes your benchmark.

Now model the rental alternative honestly. You collect six months of rent, but against that you have mortgage interest, taxes, insurance, maintenance, possible management, leasing costs, turnover, cleaning and whatever work is necessary to make the house market-ready again afterward.

Then add something people often leave out: the opportunity cost of the equity.

You said the reason you want to sell is to redeploy the proceeds where you now live.

If you have $250,000 of equity trapped in Minnesota for another six or nine months, that capital isn't free just because it isn't appearing as an expense on the property's P&L. If you have a strong investment opportunity in your new market, delaying access to that capital has an economic cost too.

That can completely change the rent-versus-sell calculation.

I would also be wary of assuming:

That's certainly possible.

But you have stacked several assumptions on top of one another.

The tenant has to perform. The property has to come back in good condition. Your timing has to work. The spring buyer pool has to be better. Comparable inventory can't improve more than demand does. And the additional sale price has to exceed all the carrying costs and lost use of your equity.

Maybe it does.

But I'd make the spreadsheet prove it.

There is also an important practical issue in Minnesota: if you put someone into the property under a definite-term lease and then decide you want to sell earlier, the sale generally doesn't make the lease disappear. The buyer steps into the landlord's position and inherits the existing lease.

That matters enormously with a ~$700k single-family home because your likely buyer is probably an owner-occupant, not another landlord.

Selling a $700k house vacant and beautifully presented is one product.

Selling the same house with a tenant entitled to remain there is a different product with a much smaller buyer pool.

So if I did rent it specifically as a bridge to a spring sale, I would want the lease termination date to leave meaningful time before the desired listing date for possession, repairs, cleaning, landscaping, photography and staging. I would not schedule everything so that the tenant leaves Friday and the house hits MLS Monday.

The neighbor's daughter may make this easier, but I would still treat it like a real tenancy.

Normal screening. Real lease. Security deposit. Move-in documentation. Insurance. Clear maintenance responsibilities. No handshake arrangement because everybody knows everybody.

In some ways, renting to a neighbor's family member gives you more reason to be formal, not less. A business disagreement is much easier to resolve when nobody has to see the other person's mother while taking the trash cans out.

I would also talk to your CPA before converting it to rental use. If this has been your primary residence, renting it temporarily does not automatically destroy the federal home-sale exclusion; the familiar ownership/use test generally looks at whether you owned and used it as your main home for at least two of the five years before sale. But rental use introduces depreciation, and depreciation allowed or allowable during the rental period can create taxable gain that isn't covered by that exclusion.

Probably not a reason by itself to avoid six months of rent.

Definitely a reason to know the number before doing it.

As for furnished/medium-term versus a conventional lease, I wouldn't add operational complexity unless the economics justify it. Furnishing a five-bedroom house, marketing it, managing utilities and creating more turnover so you can avoid being a landlord while waiting to sell sounds like solving the original problem by inventing three new ones.

If the neighbor's daughter is a strong tenant and the conventional rent is attractive, a clean fixed-term arrangement seems much more aligned with what you're actually trying to accomplish.

But before doing any of that, I would run three scenarios side by side:

Sell now: What price would realistically produce a sale in the next 30–60 days, and what cash do you walk away with?

Rent temporarily and sell later: What is the true six-month net income, what does it cost to return the property to sale condition, what spring sale price are you assuming, and what did delaying access to your equity cost you?

Keep it as a rental: Forget spring entirely. At today's realistic rent and today's value, is this actually an investment you would buy for ~$700,000 if you didn't already own it?

That last question is the one I like most.

If you had $700,000 in cash today, would you go to Minnesota and buy this exact house as a rental?

If the answer is no, ownership history shouldn't magically turn it into a good rental.

And if the real objective is to free the equity and build your portfolio where you now live, I would place a pretty high value on accomplishing that objective cleanly.

Sometimes taking another price reduction feels like losing money.

Sometimes it is simply paying the market to give your capital back.

Tina Kup · Answer

Thank you — this is really helpful, and I think you’re right that we 
need to separate the two questions: whether the house makes sense as a 
rental investment and whether renting it for six months makes sense as a
 strategy because we haven’t been able to sell it.

I also agree that we shouldn’t just assume spring will automatically 
solve the problem. We’ve had plenty of showings, so the fact that buyers
 have continued to choose other houses is definitely something we need 
to pay attention to.

I’m going to look at the numbers more carefully — what we could 
realistically sell for now, what the true net rental income would be 
after all expenses, and what waiting six months would actually cost us 
in carrying costs and tied-up equity.

I also really like your point about asking whether we would actually 
buy this house today as a rental if we had the cash. That’s probably the
 best way to look at it objectively.

We’re still considering the six-month rental because we may have a 
potential tenant through someone we know, which could make it fairly 
straightforward, but I agree that we should treat it as a real 
investment decision and not just assume it’s a way to “pause” the sale.

Thanks again — you gave us a lot to think about.

Michael K Gallagher · Answer

@Tina Kup I'm not sure what area you are in but if Brick and Banister and Amy Ranae service your area I would highly recommend reaching out to her and her team to get insights. I'm not familiar enough on your market to comment on specific sales strategy but generally looking into the velocity of the market will help guide you.   but again if you want a real opinion reach out to Brick and Banister.  they have a great IG if you want to follow there an check em out.

Tina Kup · Answer

She is saying to rent it out and put it back to market in spring. She says if it is on the market that long people will think something is wrong with the property, which I don't agree with. We purchased that house 8 years ago and it was sitting on the market that time for 8 to 10 months and did not think something was wrong with it. We do have another showing this Saturday as well. Maybe we should wait with renting out one more week?

Thank you for your response, really appreciate it!

Luka Milicevic · Answer

What is your agent advising?

If you have showings that is a good sign - listen to ffeedback and act accordingly.

Renting might not be a bad option if you have the option to do so....

Keep in mind the tax implications of when this would switch from a primary residence to an investment property and how that might impact your overall financial situation.

Tina Kup · Answer

She is saying to rent it out and put it back to market in spring. She says if it is on the market that long people will think something is wrong with the property, which I don't agree with. We purchased that house 8 years ago and it was sitting on the market that time for 8 to 10 months and did not think something was wrong with it. We do have another showing this Saturday as well. Maybe we should wait with renting out one more week?

Thank you for your response, really appreciate it!