Should I Sell My House or Rent It Out in 2025?

Mortgage rates are still high and home prices remain steady in many areas. At the same time, rental demand is strong, especially in places with limited housing. Whether to sell or rent depends on more than the market—it’s a personal financial choice based on your cash needs, long-term goals and comfort with managing property.

A financial advisor can help you assess which real estate option aligns with your financial goals.

Factors to Consider: Should I Sell My House or Rent It Out?

Homeowners today are navigating a complex environment. Interest rates are still higher than pre-pandemic levels. And, while home values remain elevated in many areas, buyer competition has cooled slightly. Meanwhile, rental demand is surging as many would-be buyers remain priced out of the market.

The decision ultimately depends on your goals and what you are comfortable managing. Many homeowners consider renting to generate passive income and hold onto their property for future appreciation. Others want to cash out while home prices remain relatively high. The right answer depends on whether you need liquidity, can remain tied to the property or want to become a landlord.

These key factors can help you determine which option best supports your financial future.

Your Financial Situation

Start by asking yourself whether you need the proceeds from a home sale to fund your next move. Selling your house may free up a substantial amount of equity. This can be used for a down payment on a new home, to pay off debt or to invest elsewhere. If you have owned the home for several years, you may be sitting on significant unrealized gains.

However, if you are financially stable and do not immediately need equity, renting out your home could provide monthly income. For those with low fixed-rate mortgages, renting can be especially attractive in 2025. Rents continue to climb in many areas, generating returns that outpace mortgage costs. Still, you will need enough financial buffer to manage vacancy periods, maintenance costs and unexpected repairs.

If you want equity to buy your next home or cover major expenses, selling may be the more straightforward and lower-risk option.

Your Long-Term Goals

Your future plans play a major role in this decision. If you are relocating temporarily, perhaps for a job, renting your home gives you the flexibility to return later. Renting out a primary residence can serve as a bridge if you are unsure about committing to a new location long-term.

If, however, you have decided to settle in a new area permanently and do not see yourself returning, keeping a property in a different city or state may be too complicated. Managing tenants from a distance can be stressful and costly unless you hire a property management company.

Those with a long-term goal of building wealth through real estate might consider keeping the property as part of a broader investment portfolio. Renting it out while it appreciates allows you to retain an asset that may continue to grow in value while collecting income along the way.

Market Conditions

Real estate markets vary by location. In many areas, home prices remain high due to limited inventory, but elevated mortgage rates have tempered buyer demand. This means homes are still selling but more slowly and with less competition.

At the same time, rental demand is rising, especially in metro areas where buying has become unaffordable for many households. Rent growth has remained steady, with some cities experiencing double-digit increases year-over-year. If you are in a market with high rental demand and stable home values, renting out your property might offer better long-term returns than selling.

However, if your local housing market is still experiencing price appreciation and strong buyer interest, selling could help you lock in profits before conditions change. Analyze your specific market to make a more informed decision. This includes examining inventory levels, average days on the market, rent trends and pricing forecasts.

Your Comfort Level With Property Management

Closeup of a "For Sale" sign in front of a house.

Renting out your home comes with specific landlord responsibilities. These include finding and vetting tenants, handling maintenance requests and complying with local landlord-tenant laws. Even with reliable tenants, property management can be time-consuming and stressful.

If you are not interested in dealing with those challenges directly, you can hire a property management company. They typically charge 8% to 12% of monthly rent, which can eat into your profit margin. However, they take care of most of the day-to-day responsibilities, including rent collection and emergency repairs.

Tax Implications

Renting out your home changes how it is treated for tax purposes. Rental income is taxable, but landlords can offset that income with deductions. These include deductions for mortgage interest, property taxes, repairs, depreciation and other expenses. Over time, these deductions can significantly reduce your tax burden.

However, holding a rental property also means paying capital gains taxes when you eventually sell. If your home was your primary residence, you may lose your eligibility for the capital gains exclusion. This is currently $250,000 for individuals and $500,000 for married couples unless you meet the ownership and use tests.

Selling now, while the home still qualifies for that exclusion, can help you avoid a larger tax bill in the future. A tax professional or financial advisor can help you determine how each scenario could affect your overall tax liability.

Why You Might Choose to Rent

Renting out your home can provide a steady source of passive income. Monthly rent payments can cover your mortgage, insurance, property taxes and repairs. You can even potentially turn a profit, depending on your loan terms and local market rates. If your mortgage is already paid off or your rate is low, the cash flow can be especially appealing.

You also benefit from property appreciation. If home values in your area are rising, you could see your asset grow in value over time while tenants help pay down your mortgage. This strategy allows you to build wealth gradually without needing to sell.

Renting also provides flexibility. If your move is temporary, you can keep your options open by renting your home and returning later. However, this route also includes risks. Extended vacancy periods, property damage and difficult tenants can all impact your income and peace of mind.

Why You Might Choose to Sell

Selling your home provides immediate access to your equity. This can be used to fund a down payment, invest or improve your cash position. Selling can often be the best route if you are planning a major life change, such as retiring, moving across the country or purchasing a new home quickly.

You also avoid the complications of property management, including tenant screening, maintenance and ongoing legal responsibilities. Selling removes these obligations and provides a clean break from the property, freeing you to focus on your next chapter.

However, selling comes with upfront costs, including real estate commissions, closing costs and possible repairs to make the home market-ready. In a softer market, you may not get the price you expect, potentially limiting your return.

Bottom Line

Choosing to sell or rent your house depends on your finances and goals. Selling gives you cash for a new home or other uses. Renting brings steady income and possible future value. Think about how much cash you need, your plans, if you want to manage a rental and what the local market looks like.

Real Estate Investment Tips

A financial advisor can help you analyze real estate investments and manage risk for your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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