Selling vs. Renting Out Your Home

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  • Sell our house or keep and rent it out?

    (6 replies)

    Hi everyone! We bought our forever home in Alameda and are moving next month. Do we keep our current house in Oakland and rent it out? Given Oakland tenant protection laws, it is impossible or expensive to get a tenant out so we'd lose control over timing of a future sale. We'd also be at a net negative for a while renting it (losing 12-14k per year) but the house should appreciate far more than that per year. It's a very nice starter home in the Dimond/Lincoln Highlands neighborhood. Making gains in the stock market over next few years may be tough in this climate. And I feel I always hear of people who regret selling rather than keeping real estate in the Bay. Do we a) keep the house for the future appreciation and as inflation hedge or b) sell our house and perhaps invest in other real estate markets?

    Curious to get opinions/experience on here, other experiences landlording in Oakland/Alameda/Berkeley, or if there is anything else we aren't thinking about.

    Sell it. The protection laws for tenants in Oakland are very very strong. My husband gets calls all day long from landlords who might lose their houses due to tenants not paying. And with the eviction moratorium in place with no end in sight, I can’t imagine wanting to be a landlord right now. 

    We just went through the same situation and decided to keep our other house. Rather than renting it out long term, however, we are more focusing on renters looking for a „sabbatical home“. That way it’s clear, that the lease just goes for 1 year Max. 

    Unless you are very committed to holding the house long term and are willing to be very involved in managing it, I would sell and invest the proceeds elsewhere. I've had two residential rental properties over the past 16 years, and I have since sold both of them. People who regret selling rather than keeping probably have rose tinted glasses on. They have an idealized vision of kicking back, collecting rents, and watching their property appreciate. They do not realize the hard work and money that goes in to maintaining a property year after year. Having a negative cash flow is another reason to consider selling. Do the math and talk to an accountant before deciding anything. Tenants have a lot of rights these days, and getting rid of a tenant (for example if you want to sell later) is almost impossible. Beware of who you rent to if you decide to keep it. I'm not supposed to say this, because it is discriminatory, but I would avoid tenants with minor children if the house is older and has lead paint. They could make you remediate and replace doors, windows, soil, etc. - very costly. I know because this happened to me. Also, if you rent to someone, they could later have a roommate move in who is psychopathic. Again, I speak from experience. The ideal tenant is a visiting professor on sabbatical, who has a finite time frame for living there. Also, if you decide to rent it, I would get a real estate attorney to write up an ironclad lease. Don't forget all the required disclosures, such as the lead paint one. 

    Only you know the exact scale of money we're talking about, but if the rent wouldn't cover your holding costs, you'd have to have a pretty generous cash flow to not feel that pain. I think most people would cut it loose for that reason. Additionally, managing a rental house can be a pretty aggravating part time job, that in this case, YOU would be paying for. One final consideration is number of kids you have. If two, maybe you want to keep it for that reason alone - you'll have homes for both your kids in case they want to live in the Bay Area when they grow up. No guarantees of that, though, and if the houses are much different in terms of their size and amenities, maybe that creates sibling strife down the road. So, all things considered, unless you're sufficiently wealthy to absorb significant holding costs, I'd sell it.

    I'm also curious about the responses....It is tempting to think the Real Estate market will keep increasing compare to the stock market, but right now you have gold in your hands if you sell your house. I think you need to do your homework and figure out your net gain if you sell now and invest in stock market vs  appreciation keeping it rented it and sell it in say 10 years.... but remember there are expenses involved if you keep it: business tax with the city of Oakland, any new tax assessments , loosing tenants and having the risk of it to be vacant for a while, maintenance, even more if the tenants don't take care of it, etc etc....It is never easy to be a landlord.. and yes, all the new ordinances and regulations regarding rent control in Oakland.

    difficult decision, ver personal, probably you already made a profit from it.

    Good luck!!

    We became an accidental landlord several years ago. My partner and I each owned places prior to getting together and kept them as rentals when we purchased a home together. Our experiences with the two properties have been quite different.

    One property is about a hundred years old and large. Most of the tenants have been couples with young children due to the size and location of the property. We replaced the roof and painted the exterior recently. This cost about $45k. I'd say I'm there every couple of months or more, to deal with various issues such as leaks, plugged toilets, broken appliances, etc... After trying to find tenants on my own, I gave up and hired a broker who charges me about a month's rent. They have found tenants who have good credit but are generally less flexible and more demanding. The tenants have generally been harder on the property.

    The other property is around twenty years old and a one bedroom, most of the tenants have been couples or singles. The building's HOA takes care of all the exterior maintenance issues. I'm rarely there. I've been able to find new tenants on my own fairly easily and they have all been really easy and flexible, knock on wood. The wear and tear on the property has so far been light.

    Based on my experience, I'd ask you how much maintenance your home will require and how much bandwidth will you have to deal with those issues on top of your own. Some of it has to do with the age and condition of the home but also how hard the tenants are on your property.

    One other factor to consider is that you will get a break on your taxes for any gain up to $500k (250k if single) if you sell your home if it was your primary residence for at least 2 years in the past 5.

  • We're considering a move to the Sierras to be closer to nature and my partner and I disagree on whether or not to sell our small Berkeley home. We bought about 5 years ago and my stance is that the price will only go up and we could rent it for what the mortgage and taxes are. His stance is that we could sell and buy a nicer home in the town we relocate to and have less debt and better quality of life. I think my tendency to hold onto the house here in the East Bay is because I'm scared about never being able to come back. I'm not sure if I'll want to, but I want to keep the option open. We are not high income but I want to keep the house as an investment, but have also heard horror stories about being landlords in Berkeley. Any advice? And who should we even talk to to help us make a good decision? A financial advisor maybe? Recommendations welcomed. Thanks BPN Community!

    I would keep it if you anticipate wanting to come back to Berkeley in the future, and sell it if you don't, unless you are interested in being a landlord. I had to laugh at "the price will only go up"--no, it won't! There are no guarantees. We bought our house at the peak of the mid-2000s market boom and it dropped in value by half in the first two years we owned it. Now it's worth twice what we paid. Real estate--and especially California real estate--is fickle. And being a landlord takes time and money; only do it if you really want to hang onto the house (or if you think it's a good path for your family to have an investment property). If you do decide to rent it, know that you need to be able to rent it for more than the mortgage plus insurance and taxes--you also need to be able to cover any maintenance costs and have a buffer for months that it may be vacant. Your insurance and taxes will go up slightly once it is no longer owner-occupied, too. Not to say that you shouldn't go that route, but be sure you have truly costed everything out. You might reach out to local property management companies to find out what they charge if you won't be a local landlord; they should also be able to give you a sense of what it will rent for. Good luck with the move!

    There are a lot of folks, hundreds, who I’ve been in contact with seeking a coop home. Of course it would be great for them to co own the home but if you are willing to negotiate a down payment for them and some low income prices I think you’ll have a happy home extension for some community minded ppls. 
    I’d suggest to post in the POCSHN Facebook group to reach out.


    We were in a similar situation (but Albany, not Berkeley, so considerations may be a bit different), considering moving to a new location.  My spouse had a job in the new place, but we weren't 100% sure what to do with our house here. A friend suggested we rent our house out just for just one year while we got a feel for the new place, and I consider it among the best advice we ever got. We rented to a visiting faculty member (try, which reduced (but can't eliminate) the risk that the tenant would decide not to leave. We rented a house in the new place, too (though we did consider buying).  Being a long-distance landlord does have some risks, but we made sure everything here was in good working order, and luckily we never had an issue.

    As it turned out, we decided to return, and with the spike in prices that year, we could never have afforded our house when we got back.  No guarantee that will happen, of course, but it's worth thinking about.  My spouse's work here had also granted a leave-of-absence, so I guess we had it pretty easy.  If you look at the decision not as a potential long-term investment, but more as a trial period, perhaps the two of you could agree to try a short-term rental for now (even one semester?).  

    I’m considering a relocation, too. My concern is investing and settling into a new home before knowing more what it’s like to actually live there. I might discover the perfect neighborhood only after living there for 6 months. (And what if the grass was greener, and I want to return?) I’ve decided I’ll rent out my house here and rent a house for the first year, at least, in my new town. I’ll probably hire a property manager if I need to really unplug from my Berkeley house. I’m thinking I’ll rent a house at first on the less-expensive side so I don’t get used to a fancier home. Then if I decide to keep the Berkeley house for an investment I could buy a house in my new town without a drop in lifestyle. If after a year or two I do decide to sell my Berkeley house, I can decide how much to put into a new house and how much to earmark for other investments. I’m getting older and would like to be mortgage-free by age 65, unless being a property owner is too lucrative. Yes, long-term financial planning is involved for the move. AND be sure about your new town before you cut ties here. It’s hard to afford to move back! Good Luck.

    I own a rental property in Oakland and one in Richmond.  In both cases, the rent covers my monthly costs and the houses have continued to go up in value.  The houses are in good condition, and I deal with my tenants - who are really great people and enjoy their homes - maybe twice a year, if that.  For me, it's definitely a positive situation.  Tenants turn over every few years, and you have to find new ones or pay someone to handle that for you. Of course, the longer the houses are mine, there is more likelihood that larger-scale maintenance will need to be done, but I have that expectation and save 10% reserves from the rent to put toward future issues.  But mostly, it's something that runs in the background of my life without much thought.  

    I also have a business where I handle rentals, and get asked this question from potential clients many times - "Should we rent or sell?!  How hard is it?"  My answer is : everything requires some work and there is always some risk, but overwhelmingly in both my personal and professional experience, maintaining a rental property is worth the effort.  It will likely give you passive income now or in the future, and gives you a fallback if you'd like to return to the Bay Area some (non-pandemic) day.  It also becomes an asset you could borrow against later, as you build up equity in your home.  I'd recommend talking to a local real estate agent for more decision-making strategies.  If you DM me I'm happy to give you some names.

    If you are still paying a mortgage on the home it will be non trivial staying in the black for the early years of the rental. More so if the home is older and if you're paying a property manager and if tenant turnover is higher. That said, we used a property management company and they definitely made up for their fees by pricing the property very well and helping us to find good long term tenants. As a side note, property values need to rise by 9% to offset sales commissions, transfer taxes, marketing etc. Then you need to consider what that money could have done for you in another investment. We bought a home 5 years ago in a tight market. If we had invested that cash, we would have been able to buy that same home now, if it were available. If there is something special about the Berkeley home that you'd like to return to, then that might be an important consideration too. Think about your future needs (kids? no stairs? Employment opportunities? Location of friends and family?).

    Before you make a decision to rent or sell your home, I would do your research on your rights as a landlord in Berkeley.  We have a friend who went abroad for a year and rented her house to people who sued her when she returned for relocation fees, despite their agreement.  We have a rental suite in our basement that we have taken off the market when our recent tenant left given the ways the winds are blowing with the Berkeley Rent Board these days - while the income from the suite helped with our mortgage, the risks have become too much for us.  While you're likely right that once you sell it's unlikely you'll be able to return, I would be very very careful before deciding to become a landlord in this city.

  • Hi BPN, My family is considering a move to Madison to be near family and we need help deciding whether or not to sell our Berkeley home prior to our relocation.  We bought in 2015 and have about 400,000 in equity due to the crazy ridiculous market. (I'm sorry- I hate posts where people say stuff like this but it is relevant to the decision-making process so I had to share.) We could possibly take some of this equity from our home to purchase in Madison although we aren't sure our income will allow us to take very much equity. Based on calculations online it seems rents are high enough that we could rent the house to cover the mortgage payment and taxes, but it is highly tempting to sell and take the equity to invest in the stock market and have a very small mortgage payment on a home in Madison.  Part of my heart is breaking leaving here, so I think emotionally I like the idea of keeping the house to be able to return to the Bay Area if/when we would be able to. Have you moved away and maintained a rental property here? Pros/cons? Any advice is appreciated. 

    This is a great problem to have! Just wanted to say kudos for this investment, it's hard living here totally get it. My husband and I think about this move all the time.

    I would consider how you plan to manage the place as a big factor. There are some great companies out there like Belong (we considered them to manage our house if we rent it out) because the laws are changing so rapidly here and you don't want a squatter situation while being far away. Not sure how much maintenance your home will need, but you just don't want to deal with that hassle is my only guess. If you really want to move on and don't want any ties to the Bay Area anymore and are sure you will never move back, I would say sell. 

    Good luck! 

    If you haven’t already done so, be sure to read up very carefully on tenant rights in Berkeley as that may be a factor in your decision. It can be very hard to get a tenant to move without cause and selling the house is not cause for eviction. Selling a tenant-occupied house can affect the market value of the house. I’m not saying you shouldn’t rent out your house because of this, but you should probably factor it into your decision. If it were me, I would sell, but I have no stomach for managing a property and tenants from a distance, not to mention the legal issues if your tenants refuse to leave when the day comes to sell. 

    Hi! So sorry for your heartbreak. I empathize. Can you rent for a year or so, until you are sure and settled in your location? Having an option for retreat in case you have "sellers remorse". The issues to consider on renting are the effect of the Berkeley Rent Law on your rental, and your potential inability to move back in.(Good cause for eviction) Please get some good legal advice on this issue, from St. John and Associates, or an attorney listed on the Berkeley Property Owners Association website.

    Issues to consider on selling are: capital gains tax, all due for the tax year that you sell. One option here would be an installment sale, so the sellers do not leap into a astronomical tax bracket or the year of sale.

    We literally weighed this exact move this time last year. I had a job offer in-hand for Madison at a decent salary and benefits, and we were confident my husband could work remotely until he found a local job, or potentially long-term. But like you we had a ton of equity in our home, approx $500k and a very comfortable mortgage payment. Our jobs are high paying with great benefits and retirement. And we did the math with a good financial planner and we would literally have to retire...5 years later in Madison!! While we wouldn't have a mortgage (theoretically we could buy up to $600k without a payment), the other costs of living are not that much lower. Property taxes are higher than here, income tax is high, groceries for the way we eat after a decade in California (fresh fruits and veggies, limited processed stuff) are quite expensive, even at Woodman's in the 9mo off-season. And benefits/retirement are nowhere near the norms established here. Ex: If we wanted another child I was looking at a 12 week unpaid mat leave and my husband might be able to use accumulated vacation. No cell phone, learning or wellness reimbursements. Retirement at maybe 2-3% match after 3-4 years of waiting vs 5-6% immediately here. And huge $400-500 premiums for healthcare and 20% copays vs employer fully-paid premium and $10-20 Kaiser copays... So we would essentially save the $2500 mortgage but come out way behind that on benefits, lower salary, etc. So it became about proximity to family, and that was huge but we had more serious conversations with friends who had moved back to family and while all loved the proximity they said they spent time together like 2, maybe 3 times per month, and while parents helped in some "emergency" situations, half the time they couldn't. So while we miss our families terribly, the big tradeoffs in lifestyle (we love being outdoors in moderate weather year-round; love fresh food stocked year round; love the Kaiser HMO for our kiddo with a medical condition) and huge financial hit weren't worth it. Instead we fly grandparents out 4x per year and put it in the budget which had been great.

    Also - if you are married, you take up to $500k in equity tax-free. This does not include your down payment. And you can deduct renovations too. Ex:. You paid $600k; you did $100k in foundation work and new windows; you sell for $1M. You have $100k that isn't taxed due to amount spent on reno and an ADDITIONAL $500k not taxed due to the tax rule ($250k/person if filing jointly). So you could sell as high as $1.2M without a tax bill on equity profit. Make sense? Work with a planner to assess options on this!

    Two thoughts about what you've written.

    (1) You may be discounting the hassle of managing a rental property in Berkeley from Madison, Wisconsin. If you've got ideal tenants who pay on time and take good care of the house, if there are no major repairs needed, if, if, if, then it sounds like an ideal investment. But those are big concerns, and it's the "IF'S" that you can't even anticipate that would worry me.

    (2) On the other hand ... taking your equity out of a relatively safe investment (Berkeley real estate) and putting it into a less safe investment (the stock market) would give me pause. In my view, the stock market is long due for a major correction ... and the only reason it's so high is that interest rates are artificially low.

    Thus, the safest path forward, in my view, would be to transfer the equity from your Berkeley home and re-invest it in a Madison home. And dress warm!

    Hi there, and congratulations on your move and having lots of equity in your home. You are certainly in a great position having invested in this booming market. As a realtor I have helped my clients, friends and family make decisions like the one you are making many times. Some decide to rent and others decide to sell, it really depends on what your short vs long term goals are and whether you are comfortable to let go of the house or become a landlord (with rent control and just cause eviction as considerations as well). For example, selling the home may make your mortgage lower in Madison, and allow you to invest the rest of the proceeds, but if you want to come back to the Bay Area it may be difficult to buy back in. Depending on the rent you can get for the house, you may be able to cover your current mortgage here with rent and keep the house in case you want to return, but you will have responsibilities like upkeep and replacing tenants when they leave, or you will need a property manager to help with that. You would also be heavily invested in the Bay Area housing market which could be a factor if you end up wanting to sell during a future dip in the market.

    We rented out our Albany Home on three different occasions when we were away for a year at a time.  Two of those times, we were certain we were coming back after a year, and the other time, we were considering moving, but really wanted to keep our options open (upon the wise advice of a friend) in case we decided to return — which we did.

    We only considered tenants who were themselves planning to be here for a limited time; most recently, using, since that caters to people in short-term situations such as sabbatical visits. We never had any issues since everyone involved was on the same page, but there is always a risk that things won't go as expected.

    (Disclaimer - since Berkeley has strong tenant protections, I know your experience in BERKELEY MAY VARY!! Be sure you fully understand your rights and those of any tenant , and have a very clear lease, before you rent if you decide to go that route.)

    Hi as a life long bay area native 50+ years, I have known dozens or more friends or acquaintances who have sold their home and moved out of the area and the most common comment is that they regret selling their house. I don't know a single one who doesn't wish they could go back in time and keep the home and rent it instead.

    The difference with the bay area compared to other locations is that once you sell that's it, few can ever think of coming back and buying (or even renting) here again. They always think it's a good time, they'll cash in on the equity they have made, often they think the market is at the peak (I remember hearing this as long ago as a child in Palo Alto when little ranch homes reached $45,000 and no one could believe they would go higher and one family sold! And the same when they hit 100k, 200k, 600k, 1million, 2 million etc), while others around 1989,1995, 2001, or 2010 thought the Bay Area was finished and wouldn't come back and sold, in some cases at a real loss.

    The cycles can cause panic for those who don't just want to live in their house and raise their family but need to rent it out instead. If one could predict the future, it would then make sense to sell at a high, and buy at the bottom of the next crash. But that's not possible so the next best thing is to hold through those cycles, about 1-2 a decade.

    Unlike other markets, the prohibitive cost of the bay area and the plethora of well off buyers who make the buying competitive makes this market unique. If you sell your place in Florida or Wisconsin, it's not the same finality. One can usually always consider buying there again without too much pain.

    So I would really recommend you explore the possibility of renting it, do everything you can to see if that is possible before you sell your house. If you know for sure that you will never ever want to live here again, even if you move from WI it would not be on your list to live than okay, it may make sense to sell just to avoid the hassle factor BUT if there is any way you can hold on to it, then really consider it.


    My family and I are also considering moving to be closer to family and decided the best option for us is to rent out the home. If we sell we would almost certainly never be able to afford to come back which was a major factor for us as we wanted to keep our options open. We feel confident that the rent would cover the mortgage and taxes so it made sense to hang on to it and keep our options open. If you're on the fence maybe rent it out for a couple years. If after that you're happy where you're at and don't see yourself moving back then you could sell the house and take the profits to invest or purchase out there. If you decide to rent it out and the rent can cover it I would also consider a property management company. They would cover all the demands of finding suitable tenants and also handling repairs as they come up. Typical costs I saw are about 7-10% of the rent. Also remember that homeowners insurance will increase slightly if you rent it out (homeowners are more likely to take care of the property vs renters). Just some things to consider if you decide to rent.

    We left San Francisco several years ago and moved to the East Bay to be closer to family but kept our place in the city. We are renting it out on our own but since we are an hour away it's not quite the same thing as doing it from another state. But here's some additional reasons to keep your place if you even think for a moment that you'll come back. This is particularly true if you like your house and its location.

    - Besides our fear of being priced out of the city if/when we wanted to return, another reason we kept our place was property taxes. If you bought in 2015, your house probably appreciated 50%+, but because of Prop 13, your property taxes stayed about the same. If you sold your house today and then returned a year later and bought the same house, your property taxes would be 50%+ higher. The increase will probably only get worse the longer you are away.

    - A third reason we kept our house is the cost to sell it, about 5% (or $50,000 if your house sells for $1mm, $75,000 if it sells for $1.5mm, etc...). That will take a bite out of your equity. If we chose to return then we'd have that much less money.

    - It's such a pain to to purchase a house here. We went through the process in the East Bay recently and the amount of time and emotional energy we expended was exhausting.

    Good luck on your decision. I think Madison is wonderful and much of Wisconsin is very beautiful but if it's breaking your heart to leave, maybe listen to you heart.