Should You Rent Out or Sell Your House?

Should You Rent Out or Sell Your House? | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert

Deciding what to do with your house when you're ready to move can be a significant decision, especially in competitive real estate markets like Los Angeles and Beverly Hills, CA. Should you sell it and use the proceeds for your next adventure, or keep it as a rental to build long-term wealth? This is a common dilemma for homeowners, and the answer isn’t always straightforward. Whether you’re curious about the potential income from renting or worried about the responsibilities of being a landlord, there’s a lot to consider.

Key Questions to Consider

Is Your House a Good Fit for Renting?

Even if you're interested in becoming a landlord, your current house might not be ideal for renting. For instance, if you’re moving far away, maintaining the property could be a hassle. Additionally, the neighborhood may not attract renters, or the house might need significant repairs before it can be rented out. In Los Angeles, areas like Beverly Hills and West Hollywood typically attract high-end renters, while other neighborhoods might not.

Are You Ready for the Realities of Being a Landlord?

Managing a rental property isn't just about collecting rent checks. It can be time-consuming and sometimes challenging. You may get calls from tenants at all hours with maintenance requests, or deal with damages that need repair before the next lease starts. You might also encounter tenants falling behind on payments or breaking their lease early. Investopedia highlights:

"It isn’t difficult to find horror stories of landlords troubled with more headaches than profits. Before deciding to rent, consider talking to other landlords and doing a detailed cost analysis. You might find that selling your home is a better financial decision and less stressful.”

Do You Have a Good Understanding of What It’ll Cost?

If you're thinking about renting out your home primarily to generate extra income, remember that there are additional costs to plan for. According to Bankrate, these include:

• Mortgage and Property Taxes: These expenses must be paid even if the rent doesn't cover all of it.
• Insurance: Landlord insurance costs about 25% more than regular home insurance and is necessary to cover damages and injuries.
• Maintenance and Repairs: Plan to spend at least 1% of the home's value annually, more if the home is older.
• Finding a Tenant: This involves advertising costs and potentially paying for background checks.
• Vacancies: If the property sits empty between tenants, you'll lose rental income.
• Management and HOA Fees: A property manager can ease the burden but typically charges about 10% of the rent. HOA fees are an additional cost if applicable.

Bottom Line

Selling or renting out your home in areas like Los Angeles and Beverly Hills is a personal decision that depends on your circumstances. The luxury real estate market in these areas offers unique opportunities and challenges, whether you’re looking to sell quickly at a high price or find high-end tenants willing to pay premium rents. Make sure to weigh the pros and cons carefully and consult with professionals so you feel supported and informed as you make your decision. We’re here to help you navigate these options and ensure you make the best choice for your future.

Call Christophe Choo at (310) 777-6342 to tour your future home "HERE" or click "HERE" to estimate your home value