When to Sell Your House, When to Rent it Out

You have decided to move. It may be across town, 20 miles away or even a few states in distance. You are excited to find a new place, but what about your old house? Should you go through the process of selling it or find a good tenant and rent it out? There is not 100% right answer because it really does depend on the situation.

If the housing market is hot, you should have no problem selling the house for a good price and in a reasonable amount of time. The profit from the home sale could fund your new purchase and then some. This strategy takes preparation and the ability to be flexible as you will have to change your objectives if the house doesn't sell quickly as expected. If the decision to move comes up on short notice, you may not have the option to sell the house before you are leaving. In that case, you may have to try to sell the house after you have left or rent it below market value to get tenants in the house and paying the mortgage quickly.

It also depends on your objective. If this is a temporary move, or one that you may move back to the area in the next couple years, it would probably be best to rent the house and keep it as a future option if you want to move back in. Obviously, if you get a good lease-option opportunity or a good sale price, you'll probably take it and worry about a few years later when it gets here. In the case you rent the property and will be out of the area, it's a good idea to get a management company to handle the month-to-month maintenance of the rental as you won't be able to drop by and check up on its condition regularly. They can cost 10% of the monthly rent. but the peace of mind that the property is taken care of when you are away is worth the price. If you are staying in the area, you might want to take the responsibility of managing the property yourself. Either way, screening your tenants is very important.

Online you can find rental applications, which every potential tenant should fill out completely. This is allow you to check their references, employment, credit and rental history. In addition to being thorough when checking the background of the applicant, talking to them will give you a good insight into them as a person. You can get a good idea if they will rent from you with the potential to buy or extend the agreement or rent for only 12 months. The more potential they have for a longer commitment, the better. Other considerations when renting out your house are if you will allow pets, smokers or other situations. When screening the applicants, you must let the people you don't rent to why they were declined and it must comply with equal opportunity standards. After choosing a renter, collect the security deposit (usually one month's rent or a little more), any other deposits (pets or otherwise) and sign the paperwork. The paperwork should include a separate section for anything you can think of that won't be listed on a standard rental agreement. Make sure to discuss with your tenants yours and their expectations of each other and as many "what if" scenarios you can think of before they actually move in. Most of the bad situations a landlord and tenant get into are the result of bad communication. Write as many things in the agreement as possible, from who is responsible for what damage to the procedures if a natural disaster occurs. Preparing for the unexpected is a great way to be ready for most situations that could come your way.

After renting out the house, periodically check on the house to see how the tenants are keeping it. After a couple months you will either see they are taking care of it and not feel the need to stop by that often or may need to discuss your observations with them. Calling ahead of time is a courtesy you should give them before stopping by, but you could call when you are on the way so they don't have a lot of notice - you want to see the house in its natural state, not like they are preparing for company.

The more preparation you put into renting the house out, the higher likelihood of having a good experience you will have. In an ideal situation, your tenants will enjoy living there and eventually want to buy the house when they are ready and you will get a quality renter that will be low-maintenance and not a consistent worry on your mind.