Sell Your Home or Rent It Out? The Best Advice in Current Housing Market

There are many reasons why you might be looking to sell your home—upgrading from your first property, moving across the country, or simply starting afresh.

However, with mortgage rates rising across the U.S., pricing many first-time buyers out of their dream properties, and worries regarding an economic recession, current homeowners may be questioning if now is the right time to sell.

Depending on your current financial standing, your career, and your local housing market, you may be better off renting out your old home rather than selling it.

There are pros and cons to holding on to your property: a passive income could help boost your finances, but there are additional costs if you take on the role of landlord.

Choosing to become a landlord could be the better financial decision if you have the financial security. Cedric Stewart, a property expert with Entourage RG, tells Newsweek the main consideration for when you are thinking of renting your property is affordability.

"Just because you can rent a home, that doesn't mean you should," Stewart said. "When you become a landlord, you're a small business owner providing housing in exchange for a financial profit. It's supposed to be a win-win."

Stewart suggested considering what you can and cannot afford before committing to renting out your home. "Can you afford to hold onto this property if it remains vacant? Can you afford to maintain the property should any repair issues arise? Will this property offer you a benefit in the way of positive cash flow? What are the other costs (including hassles and your time) associated with renting the property?

"If you answer all of those questions positively, the numbers look good, and you do not have to write a check every month to keep the property, it may be a good financial decision. Rental rates aren't tied to housing values, so you should be able to make money even if the real estate bubble 'bursts' and property values drop."

Renting out your home could be a worthwhile investment, but it depends on where your property is and the desirability of that market.

Stewart said that your home could make for a good rental property investment area if it is in an "area where people want to live with a steady population and stable workforce."

In some locations, rental prices might be enough to cover your outstanding mortgage payments. Ultimately, you should consider your mortgage interest rates, additional taxes and the cost of homeowners insurance.

Stewart says you should consider speaking with a real estate agent who can match you with a tenant or give an idea of your rental prospects.

A qualified professional would also be able to give you insight as to whether your location is a desirable one for tenants—for instance, if it's near a university, a city center or major employer.

Stewart suggests reaching out to a professional if it is your first time renting. They can also advise you against simple pitfalls that could leave you struggling financially.

"If you do it on your own it can be complicated and downright dangerous," Stewart said. "People can manipulate technology and paperwork to misrepresent themselves. Also, there are certain documents made to protect both parties that everyone may not know about or have access to.

"For this reason, on your first rental you should consider hiring an experienced realtor or property manager to assist with the process.

"Whatever you pay them pales in comparison to what it would cost if you missed a step/document. Then, after you get the hang of it, if you want to do it on your own you'll be in a better position."