When homeowners relocate, their first step is to list their former homes for sale. Many of them must sell—they need the money from the sale of the home to afford a new one.
But homeowners who have financial flexibility have a choice—they can sell their former home…or keep it and rent it out. A rental property can be a solid investment, and hanging onto a former home can be particularly appealing in today’s real estate market.
Bottom Line Personal asked real estate professional Mike Steward what homeowners need to know to make this sell-versus-rent decision wisely…
Why Renting Out a Home May Be Best in 2026
Many of today’s homeowners have mortgage rates that are simply too good to give up. Homeowners who took out 30-year fixed-rate mortgages between 2010 and early 2022 likely have mortgage rates below 5%…and some have rates below 4% or even below 3%. Those rates are much lower than anything available today—as of late January 2026, 30-year fixed mortgage rates were in the neighborhood of 6.2%.
A low mortgage rate is one of their most valuable financial assets a homeowner has. Example: A homeowner who has a 30-year $450,000 mortgage with a fixed rate of 4% would pay about $200,000 less in interest over the life of that loan than he/she would with a 6.2% rate. In other words, that low-rate mortgage is potentially worth almost a quarter of a million dollars to this homeowner. But he can’t keep that rate when he sells the home and can’t apply it to his next home…and he probably can’t pass the low rate along to the person who buys his house. Result: The valuable asset simply disappears. If instead this homeowner keeps the house and rents it out, he probably can keep that extremely valuable low mortgage rate and generate rental income.
Important: Before renting out your home, confirm that your mortgage contract allows you to do so. Mortgage contracts often include some rental restrictions, perhaps requiring the borrower to use the home as a primary residence for 12 months before renting it out, for example.
Another way today’s high mortgage rates affect the rent-versus-sell decision: They’re keeping potential homebuyers in the rental market. Plenty of people who would like to be homeowners are renting homes because today’s relatively steep mortgage rates—combined with high home values in many parts of the US—have pushed the cost of homeownership out of their reach. Result: There’s a shortage of buyers in many markets, making it hard to sell homes for what sellers expect them to fetch…and an unusually large supply of renters, pushing rents upward.
Oft-Overlooked Financial Considerations
When people choose between renting out a home and selling it, they tend to focus on two financial factors…
Whether they can afford to buy a new home without selling their current one.
Whether renting out the former home will produce a profit based on a cash-flow analysis—specifically, whether the home will bring in sufficient monthly rent to cover their mortgage payments.
Both these factors are certainly worth considering, but there are a few additional financial matters that should be considered as well…
Tax benefits
When a property owner rents out a home, that home becomes a business, and the costs of owning the home, such as interest on their mortgage payments, property taxes, homeowners’ insurance and property-management costs, become deductible business expenses. How much these tax write-offs are worth to the homeowner depends in part on their tax bracket and other factors, so it’s worth discussing this topic with a tax professional and your property manager.
Debt paydown
Each month the home is rented out is one more mortgage payment that can be made, slowly paying down the mortgage balance and increasing the homeowner’s equity in the property. This not only pays down the debt but also frees up the homeowner’s credit for other purchases.
Appreciation
US home values increased by an average of 4.27% per year from 1967 through 2024, according to Redfin. These rising values vary from year to year and by location, but if someone buys a $450,000 home and keeps it for the full duration of a 30-year mortgage, he/she might reasonably expect to end up owning a property worth in excess of $1.5 million. That appreciation can be even more valuable than the positive cash flow the rental property generates.
Potential ownership costs increase
Even homeowners who have fixed-rate mortgages don’t necessarily have fixed homeownership costs. Property taxes and homeowners’ insurance have been rising rapidly recently in many parts of the country…and as a home ages, maintenance expenses tend to climb. Homeowners’ association (HOA) fees can be sizeable in some neighborhoods, too. All these costs can eat into the financial upside of keeping the home. And if the homeowner doesn’t want to serve as a landlord—a major commitment—also factor in the cost of hiring a property-management company. This cost will vary by region and by the range of services the company provides, but it is often around 12% of the rental income generated by the property. Warning: If you do opt to serve as landlord, study up on local landlord-tenant laws. Many states and cities have complex and often tenant-friendly laws about what landlords must and must not do. Failing to follow those precisely can create legal complications.
Boomerang homeownership
Renting out a home can make particular financial sense for a homeowner who is moving out of a region but who might move back in the future.
How Much Would My House Rent For?
One simple way to get a general sense of the monthly rent a property might fetch is to use real estate websites such as Zillow.com and Redfin.com to see how much other property owners are asking for similar rental properties in the area.
Caution: Consider the figures you find on these sites only a very rough preliminary estimate—these rental properties might not be as similar to your property as you believe…and the listed rental prices reveal only how much other property owners are asking, not how much tenants actually are willing to pay.
To get a more accurate sense of what a specific home might rent for: Ask a well-established property-management company in the area for an estimate. These companies usually are willing to provide these estimates without any cost or commitment.
Also consider what factors affect the appeal of a home on the rental market…
Local job market
If employers within a reasonable commuting distance are hiring, people will be moving into the area and looking for places to live. Many of these newcomers will be young professionals who have kids, so they’ll favor renting homes over apartments. If the local job market is weak, though, there could be more rental properties than renters.
Safe, walkable neighborhood
Renters generally favor homes in neighborhoods that seem sunny and walkable during daytime and safe and secure even at night. The presence of well-maintained sidewalks is a big plus.
Four bedrooms
Three-bedroom homes historically have been most desirable, but ever since the pandemic, many young families want an extra bedroom to serve as a home office—working from home one day or more per week has become common.
Good condition
It is possible to rent out homes that are a bit run down—but only to sub-par tenants. Desirable tenants—people who pay rent on time and treat properties with respect—inevitably gravitate to well-maintained properties.
The Let-the-Market-Decide Option
Not certain whether to rent out a home or sell it? If you have some flexibility, one option is to let the housing market make the decision for you. Put the home up for sale at a price you consider acceptable…but if it doesn’t sell within 90 to 120 days, take the home off the market and rent it out instead. You can always try to sell the home again later.
