Plan to Sell Your House Then Rent For a Bit? Read This First

Drawbacks of renting after selling

If you’re considering renting after selling, you also need to consider the downsides. Here are a few drawbacks that might prevent you from signing a rental application after your home sale:

Moving twice is stressful and expensive

You’ll have to move twice if you make a pit stop at a rental before your next place. While you can store some things between moves, it will still require extra work and money.

The average cost of a local move for a 2-3 bedroom home is between $966 – $1,733, while the average cost of a long-distance move (over 1,000 miles) is ranging between $3,145 – $5,958. Even if you’re moving locally, moving twice could range between $501 for a studio apartment to $2,988 and higher for a 4-5 bedroom house. It all depends on the size of your home and how many items you have to move.

Your rent goes into another owner’s pockets

The most glaring drawback of renting after selling is that you won’t build home equity. Instead of paying your mortgage, you’ll be paying rent, which you’ll never see a penny of again.

“It’s not your home, so you’re not making equity off of it. You’re paying somebody else’s mortgage,” Van Den Bosch says.

Of course, you must decide how important equity is to you and how long you feel comfortable renting.

Rent may cost as much as your former mortgage (or even more!)

In some parts of the country, rental prices may be similar to your mortgage or even higher.

You can use SmartAsset’s “Rent vs. Buy” calculator to help decide if you would be paying more or less in monthly costs for renting or buying. This tool considers your yearly income, current rental rate, and home price to help you decide whether to buy or rent.

There may be a rental shortage in your market

A seller’s market can cause rental shortages, meaning you would have fewer rentals from which to choose. Finding a rental can be tricky, even without a shortage.

NAR’s 2024 Member Profile reveals that the real estate professionals’ capacity to assist clients is affected by the lack of inventory, among other factors.

It’s best to speak to your real estate agent about the market in your area before you put all your eggs in the rental basket.

It’s difficult to time the market to buy low

Selling high and buying low sounds like a win-win situation, but how do you ensure you buy low? You’ll have to time the market, which is more complicated than it may seem. Even experts can only predict so much about the future of the real estate market.

Overestimating your ability to time the market can lead to dire consequences. If prices stay high, you could end up in your rental longer than expected, taking more and more rent money out of your pocket — and possibly paying even more for your next home if you decide you can’t wait any longer to buy.