Should I Sell or Rent My Home?
by Becca Stewart - March 31st, 2022
It's time for yet another PCS, and you're trying to decide what to do with your current home. Selling sounds great, especially in a healthy housing market. But renting it out and building equity sounds nice, too. Should military owners sell or rent their homes?
Should I Sell or Rent My Home?
Unfortunately, we can't answer that question for you. It's a decision military homeowners need to answer for themselves. There are several factors to consider before deciding whether to keep your current home and rent it out or sell it. Below are the pros and cons of both options to help you make your decision a little easier.
Selling your home
Military families rarely stay in one place for long. Military homeowners have a particularly difficult choice when it's time to PCS. Selling a home means less hassle and worry, but it also means giving up valuable long-term wealth.
Pros of selling vs renting
In a strong housing market, selling your home could be a viable option. If your home is currently worth more than you paid for it, you could earn a profit. That profit, of course, can go towards another property at your next location or free up capital for other expenses, like college or travel.
Additionally, selling your home means you will be free of that house – and all the responsibilities that come with it. No worrying about maintenance, dreadful renters, or middle-of-the-night emergency pipe bursts. When you sell your home, you can walk away with nothing to tie you to your old duty station but the memories.
Cons of selling
While selling your home makes life more convenient for military homeowners, there are financial disadvantages to offloading your property every time you move.
Homeownership is one of the best ways to build wealth long-term; the keyword being long-term.
When you purchase a home, the value (hopefully) rises over time, helping you gain equity. If you sell, you lose the possibility of earning that equity.
For military homeowners, owning a home and renting it out can eventually become a valuable income stream. Once the mortgage is paid in full, any rents collected are pure profit.
To build wealth through real estate, you have to play the long game. If you sell your home after only a few years in your location, you give up the potential future earnings, either through equity gains, rental incomes, or both.
Finally, if your home's current value is at or below the price you paid initially, you're going to lose money. Selling a home isn't free. The seller typically pays real estate commissions for both the sellers' and buyers' agents, plus additional costs associated with selling a home. Even if your home is worth a few thousand more than you paid for it, you may still owe money at closing.
Pro tip: one way to lower your selling costs is to work with a military-friendly real estate agent. Click here to find reputable agents near you who can get you the most for your home.
Renting out your home
If you want to build long-term wealth through real estate, the question shouldn't be, "should I sell or rent my home?". Instead, the question should be, "how much rent should we charge?"
Renting out your home can mean significant long-term profits. But for military homeowners, becoming a landlord sounds overwhelming. Are the rewards worth the risk?
Pros of becoming a landlord
The real advantage to renting out your home is building wealth over time. When you rent out your home, your tenants essentially pay your mortgage for you. Sure, there will be maintenance costs and other expenses along the way, but as a landlord, you are likely gaining equity with every year you own that home.
Once you pay off your mortgage, rental payments become profit. Some military homeowners buy real estate early in their careers, pay them off before retirement, and then live off the subsequent rental income.
If you intend to retire where the home is located, renting out the property has another potential benefit. Except for short-lived downturns in the market, real estate has steadily increased in value over the years. Homes will likely be more expensive when you retire than they were when you bought the house. Holding that property means you are assured an affordable place to live, if you so choose, once you leave the military.
Cons of renting out your home
Becoming a landlord isn't for the faint of heart. While there are financial advantages to renting out your home, there are plenty of potential disadvantages to consider, too.
First, you are still responsible for any maintenance and repairs at the home. Dishwasher breaks? You pay for it. Hot water heater springs a leak? You pay for it. Roof damage from a hailstorm? Well, you get the idea. Owning a home can be expensive. If you can't charge enough rent to cover your mortgage payment plus potential maintenance costs, you might want to reconsider.
Speaking of maintenance, military homeowners face unique challenges when renting out a home. It doesn't matter how handy you are around the house. If you are stationed thousands of miles away, someone else will have to manage and maintain the property for you. That, of course, is an additional expense that you'll need to consider.
Finally, we can't talk about the cons of renting out your home without talking about nightmare renters. There are plenty of tenant horror stories that will make you rethink becoming a landlord: broken windows, destroyed carpets, stolen appliances, unpaid rent, and complaints from neighbors. If you rent out your home, there is a possibility, however slight, that you will end up with problem renters. You can mitigate this risk by carefully screening your tenants, running background checks, and calling references.
Another pro tip: When it comes to renters, hope for the best, but prepare for the worst. Most likely, your renters will be wonderful. But it's wise to have some funds on hand just in case you need legal assistance to evict the tenants or need to make significant repairs once they leave.
Should you sell or rent? The choice is up to you. Selling your home eliminates the headaches of being a landlord. But renting out your home allows you to build long-term equity. Talk with an experienced and knowledgeable real estate agent who can help you make the best decision for your military family.
Becca Stewart is an Air Force Spouse, mother of two, freelance writer, and sufferer of Wanderlust. Originally from Colorado, she enjoys anything outdoors, especially if there’s snow involved. She is a travel fanatic, always looking for her next great adventure. As a full-time writer, Becca works closely with several nonprofit organizations and is a passionate advocate for human rights and military families. Learn more at writebecca.com.
