In today’s market, Texas homeowners have a big decision to make: rent or sell. This can be a big financial decision, especially with Texas property tax laws and the ever-changing local market. Whether you’re in a big city like Dallas or need to sell your house fast in Garland, knowing your options is key.
This will go over the pros and cons of both renting and selling your house. We’ll go through scenarios, and crunch numbers and give you insights to help you make this big decision. By the end, you’ll have a better idea of which one is best for you.
Rent or Sell My House?
Renting or selling your house is more than just a financial decision – it’s a decision that affects your lifestyle, plans, and long-term wealth. Each has pros and cons and what’s best for you depends on many things.
Renting your house can give you a steady income and build equity over time. It’s a way to hold onto a valuable asset and potentially benefit from property appreciation. Selling your house can give you a big chunk of cash to use for other investments, to buy a new house, or to fund major life changes.
Consider your current situation, your future goals, and the local real estate market. Are you ready to be a landlord, dealing with tenants and a property management company? Or would you rather cash out and move on to the next adventure? Let’s get into both options to help you decide.
Reasons to Rent Your House Now
Renting out your house can be a smart financial move in many cases. Here are some of the benefits:
Rental Income
One of the biggest advantages of renting out your house is the regular rental income. This extra cash can boost your monthly cash flow and financial stability.
For example, let’s say your monthly mortgage payment is $1,200 and your other expenses (property taxes and insurance premiums) are $300 per month. If you can rent your house for $1,800 per month you’d be making an extra $300. That’s $3,600 per year!
This extra cash can be used to pay off debts, save for retirement, or invest in other properties. It’s like having a second job but without the extra hours of work.
Building Equity While Someone Else Pays the Mortgage
When you rent out your house your tenants are essentially paying off your mortgage for you. Each month as they pay rent a portion of that money goes towards your loan principal. So you’re building equity in the property without using your own money.
This can add up to a lot over time. For example, if you have a $200,000 mortgage and your tenants’ rent payments cover the full mortgage payment for 5 years you could build up tens of thousands of dollars in equity depending on your interest rate and loan terms.
Property Value Appreciation
Real estate tends to increase in value over time. By holding onto your property and renting it out you allow it to appreciate. So when you decide to sell you might be able to get a higher price than if you sold now.
For example, if you bought your house for $250,000 and it appreciates 3% per year, after 5 years of renting it out it could be worth nearly $290,000. That’s a $40,000 increase in value!
Reasons to Sell Your House
While renting has benefits, selling your house can be a smart move too. Let’s get into why putting your house on the market might be the way to go.
Sell Now?
It’s hard to know if it’s the right time to sell. Here are some things to consider:
House Prices Have Gone Up But Have Now Flat Lined
Over the past few years, house prices in many parts of Texas have gone up big time. So if you bought your house a while back it’s probably worth a lot more than when you bought it. But the rate of price increases has slowed down in many areas and some experts say we’ve hit a “plateau.”
If you’re thinking of selling this could be the time. You might be able to sell your house for more than you paid and get some of the price increases of the past few years. But if you wait too long prices might not go up much more or could go down.
You Think You Can Make A Profit
If you think you can sell your house for more than you owe on it (if you have a mortgage) plus all the costs of selling you could end up with a nice profit. This might be a good reason to sell especially if you need cash for other investments or life changes.
Let’s use an example. You owe $150,000 on your mortgage and think you can sell your house for $250,000. After paying off your mortgage and the costs of selling (which might be around 10% of the sale price or $25,000) you could walk away with about $75,000. That’s a nice chunk of change that could be used for a down payment on a new house, to invest in a business, or to add to your retirement savings.
Want to sell your house fast without the hassle of listing it on the market? Companies that buy houses in TX can help! We buy houses in Texas as-is, with no realtor commissions. If you’re facing foreclosure, dealing with bad tenants or just want a fast, hassle-free sale we can help. Contact us today for a fair cash offer on your house!
Rent Your House
Rental Demand is High in Your Area
In many parts of Texas including Garland and Mesquite there’s a high demand for rental homes. This demand can work in your favor as a landlord. When more people are looking for rentals than properties available you might be able to charge higher rent and find tenants faster.
Before you decide to rent your house out research the local rental market. Look at what similar houses in your area are renting for and rental prices. This will give you an idea of what you could rent your house for.
You Want to Own a Rental
Owning a rental property can be a way to build wealth over time. When you rent out your house you’re not just getting monthly rent payments. Your tenants are also paying off your mortgage (if you have one). Over time as you pay down your mortgage and if property values increase you could end up owning an asset free and clear.
Rental properties can also be a source of passive income. Being a landlord does require some work like finding tenants, collecting rent, and handling maintenance issues but it’s often less time-consuming than a traditional job. This can be especially appealing if you want to diversify your income streams or plan for retirement.
Renting Your Property to Add Cash to Your Pocket
As mentioned earlier rental income can be a nice extra to your regular income. If you can charge more in rent than your monthly expenses for the property you’ll have extra cash each month. This can give you financial flexibility and help you reach your goals faster.
Let’s look at a simple example:
- Monthly rent: $1,500
- Mortgage payment: $1,000
- Property taxes and insurance: $300
- Maintenance fund: $100
In this scenario, you’d be adding $100 to your pocket each month. That’s $1,200 per year that you wouldn’t have if you sold the house. Over time this extra cash can add up big time and help you pay off debt, save for a big purchase, or invest in other opportunities.
Future Flexibility
Renting your house keeps your options open for the future. Maybe you’re not sure if you want to sell or rent right now or perhaps you think you might move back into the house someday. By renting it out you get to keep the property and still get income from it.
This can be especially helpful if you’re moving to a new area for work but think you might move back in a few years. Instead of selling your house and then having to buy a new one when you get back (which could be more expensive) you can rent it out and have a place to go back to.
Reasons to Sell Your Home
While renting can be good, there are other good reasons to sell your house. Let’s look at some of those reasons.
Getting Liquid Cash
One of the main reasons people sell their homes is to get a lump sum of cash. When you sell your house, especially if it’s appreciated since you bought it you can potentially walk away with a big chunk of change.
This cash can be used for many things. You might use it to make a down payment on a new home, invest in stocks or bonds, start a business, pay off high-interest debt, fund your kids’ college education, or boost your retirement savings.
For example, if you have a lot of equity in your home, selling could give you enough cash to achieve multiple financial goals at once. You could pay off your credit card debt, put some money in your retirement account, and still have enough left over for a down payment on a new home.
Downsizing Your House
As life changes so do your housing needs. Maybe your kids have moved out and you find yourself with more space than you need. Or perhaps you’re looking to reduce your expenses as you approach retirement. Downsizing to a smaller home can be a way to cut costs on things like utilities, property taxes, and maintenance.
Selling your current home and moving to a smaller one can free up cash and potentially reduce your monthly expenses. This can be especially good if you’re nearing retirement or looking to simplify your life.
For example, if you’re currently living in a 2,500-square-foot house and you downsize to a 1,500-square-foot house you could potentially save hundreds of dollars a month on utilities alone. A smaller house means less time spent on cleaning and maintenance giving you more time to enjoy life or pursue hobbies.
Reinvesting the Profit Elsewhere
If you’ve built up a lot of equity in your home (meaning it’s worth more than you owe on it) selling could allow you to reinvest that money in other ways that might give a higher return on investment.
For example, you could sell your current house and use the money to buy two smaller properties to rent out. This could increase your monthly income and spread out your risk. Or you might use the profit to invest in the stock market, start a business, or even invest in your education to increase your earning potential.
Lower Property Taxes
Texas property tax laws can make owning a home expensive, especially in high-value areas. If property taxes have become a burden, selling your home and moving to an area with lower property taxes could save you money in the long run.
Remember property taxes are based on the assessed value of your home. So if you sell a high-value home and buy a lower-value one you’ll likely see a decrease in your annual property tax bill.
For example, if you’re currently paying $6,000 a year in property taxes and move to a lower-value home where the taxes are only $3,000 a year that’s $3,000 a year in savings. Over 10 years that’s $30,000 – a big chunk of change that could be applied to other financial goals.
Avoiding the Headaches of Being a Landlord
While renting out your property can generate income it also comes with responsibilities. As a landlord you’ll need to find and screen tenants, collect rent, handle repairs and maintenance and potentially deal with difficult situations with renters like evictions.
If you don’t want to deal with these responsibilities or if you live far from the property, selling might be the better option. It allows you to make a clean break and avoid the ongoing work and stress of being a landlord.
Selling in a Seller’s Market
If the real estate market in your area is a seller’s market (meaning there are more buyers than homes for sale) it might be a good time to sell. In a seller’s market, you’ll get multiple offers, sell quickly, and potentially get a higher price than you would in a balanced or buyer’s market.
Signs of a seller’s market include homes selling quickly (often within days of being listed), bidding wars on properties, and homes selling at or above the asking price. If you’re seeing these trends in your area it might be a good time to sell.
Conclusion
The decision to rent or sell your house depends on many factors including your financial goals, local market conditions, and personal circumstances. Renting provides ongoing income and long-term appreciation but comes with landlord responsibilities. Selling gives you a lump sum and freedom from property management fees but means giving up a potentially appreciating asset.
Think about your long-term goals, financial needs, and willingness to be a landlord. Consult with financial advisors or experienced real estate professionals to make a decision. Remember there’s no one-size-fits-all answer – the best choice is the one that fits your situation and goals.
If you decide to sell and want a quick and easy process consider cash home buyers in Mesquite, TX. They offer a simple way to sell your home in Texas without the hassle of a traditional sale or expensive real estate agent commissions.
Whatever you choose, take the time to research and carefully weigh your options. Your home is a significant asset, and the right decision can have a lasting impact on your financial future.