You're Moving. Should You Keep Your Billings House as a Rental or Sell It?

by Ryan Thomsen

The moving boxes are stacked in the garage. You've found the next place, or you're close. And somewhere between packing the kitchen and changing your address, a question shows up that you didn't plan for: what do we do with this house?

You could sell it. You could also hand someone the keys, collect rent and keep a house you already know down to the squeaky stair. Both sound reasonable. The trouble is that this choice can get made by default, because a listing appointment got booked or because renting it out felt easier than deciding.

I've spent more than 20 years in Billings real estate, and I see this decision come up again and again. Either answer can be right. Here's how I'd think it through.

Start with what the money should do next

Before rents or tax rates, ask a simpler question. What is the equity in this house supposed to do for you once you move?

Maybe it becomes the down payment on the next place. Maybe it pays off the new mortgage so less goes out each month. Maybe you'd like it to keep producing income for years. Or maybe you'd rather not have a big piece of your net worth tied up in a house you don't live in.

Each of those points somewhere different. A rental keeps the equity in the house and asks rent to do the work. A sale turns it into money you can put somewhere else. Equity isn't the answer. Equity creates options. Which one fits depends on what you need that money for, and when.

What a rental really asks of you

Renting the old house can work well. It also changes your role. You stop being the person who lives there and start running a small business out of it.

Before deciding, write down what the house would cost to own as a rental, not just what it might rent for. That list should include:

Any mortgage payment still on it
Property taxes and insurance for a rented house
Repairs, plus bigger items coming due, like a roof or furnace
Months it might sit empty between tenants
Property management, if you'd rather not take the late-night calls yourself

Then weigh what's left against the effort. A rental across town is one thing. A rental three states away is another. Some people like being landlords and are good at it. Others discover a year in that they'd rather have the money and their weekends back.

Put both paths on one page

Once the rental side is written down, do the same for a sale. Start with a realistic price for the house, subtract what's left on the loan and the costs of selling, and look at what remains. That's the equity the house is really holding for you, and it's the number a sale would set free.

Now set the two side by side: what the rental would hand you each year after costs, and what that equity could do somewhere else. Add the part no spreadsheet shows, which is how much of your time and attention each path takes. Seeing it all on one page makes the choice a lot clearer.

Taxes can change the math too, so bring your CPA in before you decide. And if you'd finance the next home while keeping this one, ask a lender how the rental would factor in.

When keeping it can make sense

Holding the house can be the right call. The rent may still cover the costs with room to spare after you've been honest about repairs and empty months. You may have the time, or a manager you trust. You may already own rentals and know the work. And you may be comfortable leaving this much of your money in one house for a while longer.

When selling can make sense

Selling can be just as right. If the rent barely covers the costs, or the equity would do more in the next house, a sale may serve you better. Managing from a distance can start to feel like a second job. And there's real value in sleeping through a February cold snap without wondering about a pipe in a house across the state.

Waiting a bit before deciding can be fine too, as long as it's a choice and not a stall.

Have this talk before anyone mentions a listing

The best time to sort this out is before a listing appointment. Once that meeting is on the calendar, the question tends to shift from whether to sell to how much. I'd rather help you answer the first one honestly.

That's what my Next Move Review is for. We look at what the house is likely worth, the equity you have, what a sale might net after costs, and how the timing lines up with your move. If keeping it as a rental looks better for you, I'll tell you. If you already own rentals, a Property Portfolio Review looks at each one the same way.

NEXT MOVE REVIEW

Ryan Thomsen
Real Estate Advisor
Engel & Völkers Billings
406-672-8803
406realtor@gmail.com