Costs to consider
Both renting and selling a home will incur costs for you as the homeowner. If you’re thinking of becoming a landlord, one of the most important things to consider is whether the rental income you’d receive will be enough to cover the property’s mortgage and upkeep.

To determine how much rental income you can reasonably expect to earn, take a look at what other similar properties are charging and weigh that against the costs of owning and maintaining the property. From there, you can gauge whether you’ll be able to recoup your expenses, and maybe even turn a profit.

Costs of renting out a home
Mortgage: Even though you’ll be earning rental income, you’re still responsible for paying the mortgage, which may or may not be fully covered by the rent you bring in. The same goes for property taxes.
Insurance: Landlord insurance can cover certain costs, such as damage to the home or someone getting injured on the property. You can expect this to cost roughly 25 percent more than the typical homeowners insurance policy — which you’ll also still have to pay for.
Maintenance and repairs: You’ll need to keep up with routine maintenance to ensure the home is fit for tenants. As a rule of thumb, budget at least 1 percent of the home’s value every year (more if it’s an older property) to pay for maintenance.
Finding a tenant: To find a tenant, you’ll have to get the word out. Consider any marketing costs you may incur, such as taking out an advertisement. You may also need to pay for background and credit checks of potential renters — though you might be able to pass this nominal expense on to the tenant.
Vacancies: Consider, too, the cost of vacancies between tenants. If a tenant moves out and you don’t have a replacement lined up, that could be a month or more of income you’re losing out on.
Property management fees: Hiring a property manager makes being a landlord less onerous, but it eats into your profits as well. These companies tend to charge a percentage of the rent price, typically around 10 percent.
HOA fees: If your home belongs to a homeowners association, you’ll also be responsible for the HOA fees, which vary considerably depending on what type of amenities are offered.
Your own housing costs: Finally, don’t forget to factor in the costs of the mortgage or rent on wherever you’ll be living next.
Costs of selling a home
Agent commissions: If you use a real estate agent to sell your home, as most sellers do, you’ll be on the hook to pay a commission, typically between 2.5 and 3 percent of the home’s sale price. The exact amount will be negotiated beforehand, but it can add up to a significant expense: On a $400,000 sale, for example, 2.5 percent is $10,000. And depending on the details of your specific deal, you may also need to pay your buyer’s agent’s fee.
Home improvements: To get your home in shape to sell, you’ll likely have a few services to pay for. These might include sprucing up the landscaping, a thorough deep cleaning and making any necessary repairs. And paying a pro to stage your home can increase its desirability, potentially bringing in a higher price.
Closing costs: Sellers typically incur some closing costs beyond Realtor commissions, too, such as attorney fees, transfer taxes and title insurance.
Mortgage payoff: If you still have a mortgage on the home, some of your sale proceeds will go toward paying off the remainder of your loan. There may be a wire transfer fee for this as well.
When is selling your home a good choice?
If you need the cash to pay for your next house
If your ability to buy a new home relies on accessing the money tied up in the current one, then selling is your best option. That way, you can take your proceeds from the sale and put them toward your new down payment. Buying a new home while selling your current one can be a tricky balancing act, so be sure to work with an experienced real estate agent who can guide you through the process.

If you have no interest in being a landlord
Managing a rental property is time-consuming and often challenging. Are you handy and able to make some repairs yourself? If not, do you have a network of affordable contractors you can reach out to in a pinch? Consider whether you want to take on the added responsibility of being a landlord — or the added expense of paying a third party to take care of things instead.