Should You Rent or Sell Your Twin Cities Home?

If you own a home in the Twin Cities that you no longer live in, or you're about to move, you face a big decision: rent it out or sell it. There's no single right answer. It depends on your numbers, your goals and how hands-on you want to be. Here is a simple framework to help you decide, and the questions we walk through with owners.

Start with the numbers

Compare what the home could earn as a rental with what you'd net from a sale.

• Expected rent: what similar homes nearby actually rent for, not just list for.
• Monthly costs: mortgage, property taxes, insurance, HOA dues, and a maintenance reserve.
• Vacancy: each empty month costs about 8.3% of a year's rent, so plan for some turnover.
• Management: professional management, if you don't want to self-manage.
• Sale proceeds: the likely sale price, minus your mortgage payoff, closing costs and any repairs needed to sell.

A simple example

Say your home would rent for $2,200 a month, and your mortgage, taxes and insurance total $1,600. Full-service management at $130 a month and a maintenance reserve of about $150 a month leave roughly $320 a month, before vacancy and larger repairs. That cash flow is modest, but the tenant is also paying down your mortgage and you keep any appreciation. Whether that beats selling depends on your equity, your interest rate and what you'd do with the sale proceeds.

Reasons renting can make sense

• You have a low mortgage rate you don't want to give up.
• The rent covers your costs, with room for repairs and vacancy.
• You want long-term appreciation and are comfortable holding the property for years.
• You may move back, or want to keep the home for family.

Reasons selling can make sense

• The rent wouldn't cover your costs, so you'd be paying out of pocket every month.
• You need the equity for your next home or another investment.
• The home needs major repairs before it could be rented.
• You don't want the responsibility of being a landlord, even with a manager.

Don't forget taxes and rules

Taxes can change the math significantly. If the home was your primary residence, federal tax rules may let you exclude much of the gain from a sale if you lived there for at least two of the last five years, and renting it out for too long can affect that. Rental income, depreciation and expenses also have tax consequences. Talk with a tax professional before you decide.

Also check your city's rental rules. Many Twin Cities suburbs require a rental license and inspections before you can rent, and a few limit how many single-family homes in an area can be rentals. See your city's requirements on our areas we serve page, or read our guide to Twin Cities rental licenses.

Get both numbers before you decide

Because Fuze manages rentals and has its own brokerage, we can give you both sides: a rental analysis showing what your home should rent for and what management would cost, and an opinion of value showing what you could net from a sale. Then you can compare them side by side.