Home Sellers October 4, 2022

Selling vs. Renting Your Home – What to Consider

You’ve decided to move, but that still leaves the question about what to do with your current home. Is it better to sell or rent your home? This is a big decision that can create additional stress. The answer depends on a variety of factors including your financial situation, the local housing market, and what’s right for your life overall. As you weigh the options of selling vs. renting your home, take time to consider the pros and cons of each scenario.

Your Financial Situation

When it comes to deciding whether to sell or rent your home, the most important consideration is your financial situation. Take time to review your finances and get a better understanding of your overall financial health. If you are planning on purchasing a new home and need additional cash to pay for it, then selling your home is probably best. The sale of your home will provide the funds you need for a new down payment.

If you don’t need to sell your home to cover a new down payment or if you own your home outright, then renting your home may be a good option for you. It’s a way to bring in additional income, as long as the rent you’re able to charge is more than your monthly mortgage payment. But remember that money brought in from rent is considered income and counted as part of your overall finances when applying for a new mortgage and during tax time.

Local Housing Market

The local housing market plays a big role in determining what’s best for you when it comes to selling vs. renting your home. If local rental rates average below what you still owe on your mortgage, it’s probably best to sell. You don’t want to be in a position where you are losing money by taking in a monthly rent payment that’s lower than your monthly mortgage.

Also, if you purchased your home a while ago and the value has increased significantly, you may want to take advantage of selling your home at a much higher price. This is especially worth it if you are able to exclude up to $250,000 of capital gains on your taxes from the sale (or up to $500,000 for married couples). To take advantage of this, the home you’re selling must be your primary residence for at least two out of the last five years. There are several nuances to the capital gains tax, so be sure to research it thoroughly before moving forward.

Determining Rental Rate

If demand is strong for local home rentals and monthly rates are higher than your mortgage payment, renting could be a good option for you. It’s a great way to bring in additional income without investing a lot of time. Also, it’s a nice way to be able to keep your current home if you’re not ready to let go of it. Typically, homeowners determine the rental rate using the 1% rule, which is based on the current property value. For example, if your house is worth $250,000, then the amount of rent usually falls between 0.8% and 1.1%, or approximately $2,500 a month based on the 1% rule. This is a great way to come up with a ballpark number. Then depending on a variety of other factors, you can determine if you should raise or lower that number based on local market conditions. Here in Kitsap County, rentals remain strong, and Washington state vacancies remain below the national average. Watch the recent video below to learn more about Kitsap’s rental market.

Your Overall Lifestyle

Lastly, you must consider whether selling or renting your home is the best match for your overall situation, lifestyle, and personality. If you’re not excited about being a landlord and it sounds more like a hassle than an investment, selling is probably the right choice for you. Let’s face it, fielding calls from renters takes time. And, while everyone likes to think their home is in perfect condition, the reality is that things happen. What if the toilet stops working, what if the garbage disposal breaks, or what if the faucet starts leaking? What if one of these things happens while you are on vacation? As a landlord, there are many potential issues that you may have to address. If this sounds unappealing to you, selling may be best.

Being A Landlord

If you don’t mind being a landlord and look forward to working with tenants, renting could be a great option. Just keep in mind that home repairs cost money and it’s best to keep $10,000 to $15,000 on hand for unexpected expenses. Also, if you are planning on moving out of the area temporarily to take care of family members or work elsewhere, be sure to clearly communicate your return timeline with tenants and have someone dependable lined up to oversee the property and handle any possible tenant or maintenance issues that may arise. You may also want to think about using a property management company so that they can find good tenants for you, manage repairs, be on call, manage any legal issues, etc.


In the end, selling vs. renting your home is a very personal decision with many nuances. If you decide to sell, we have experienced, highly rated, local real estate experts here to help you. If you decide to rent out your home, our local Windermere Property Management office here in Silverdale is ready to help.