BreakThru Realty

Should I Rent or Sell My South Florida Home?

Reviewed by Tyson E. Sam, Founder and Broker of Record, BreakThru Realty, Florida License 3565210

The Short Answer

Compare two real numbers, not a feeling: what the home would net if sold today, and what it would net each year as a rental after taxes, insurance, association dues, repairs, vacancy and management. Selling usually wins when you need the equity, the home needs work, or the rent barely covers the costs; renting wins when the rent clears the costs comfortably and you can carry the home through a vacancy. In South Florida the insurance bill and the loss of the homestead cap often decide it.

Start With the Two Numbers

The sale number is what comparable homes nearby have closed for in the last few months, less your mortgage payoff and selling costs. The rental number is what comparable homes have actually leased for, not what landlords are asking, less everything the home costs you in a year. A BreakThru agent pulls both from the same MLS closings, so you are comparing like with like. The county market reports and the South Florida rent index on this site show how each side of the market is moving.

What a Rental Really Costs to Hold

Owners who have lived in a home for years undercount its costs because they stopped noticing them. For a rental, list them: the mortgage, property taxes at the higher non-homestead rate, homeowners and flood insurance at landlord rates, association dues and any assessment, repairs and replacements (a roof, an air conditioner and a water heater all come due eventually), a vacancy allowance of at least a month a year, and management if you will not do it yourself. Rent minus that list is the real income.

Taxes and the Homestead Cap

A Florida home you live in carries a homestead exemption and the Save Our Homes cap on how fast its assessed value can rise. When it becomes a rental it generally loses both, so the property tax can step up sharply in the first year or two, and you lose the ability to carry the cap to your next home if you wait too long. The federal exclusion on gain from selling a primary home depends on having lived in it for two of the five years before the sale, so a home rented for several years can lose it. Confirm both with a tax adviser before you decide.

The Work of Being a Landlord

Screening tenants, writing a Florida-compliant lease, getting association approval where the building requires it, handling the 2 a.m. call, and following the deposit and notice rules in Florida landlord-tenant law. Some owners enjoy it; many underestimate it. Property management handles it for a fee, which belongs in the cost list above.

When Selling Is the Better Answer

You need the equity for the next home. The home needs a roof, a kitchen or impact windows that a tenant will not pay for. The rent barely covers the costs, so one vacancy or one repair wipes out a year. Or you would rather not own a property three states away. In those cases the market value is yours to take now, and the county sell pages show how quickly homes like yours are going under contract.

When Renting Is the Better Answer

The rent clears every cost on the list with room to spare. The home is the kind tenants want and keep (a three-bedroom house with a yard, a well-run building near the water). You expect to come back to it, or you want to hold the equity and let a tenant pay the mortgage down. And you can carry the home through a quiet season without strain.

A Simple Decision Framework

Choose selling when the home needs money you would rather not spend, when the yearly rental income after costs is thin, or when you need the equity now. Choose renting when the home nets a comfortable income after every cost, when you can fund a vacancy and a major repair from savings, and when you have talked through the tax changes with an adviser. If the two are close, the deciding question is whether you want to be a landlord.

Talk It Through With a Broker

Every sale is its own set of numbers. Request a free valuation built from the closed sales that match your home, or read the market figures for your county on BreakThru Realty Research.

Should I rent or sell my home: Questions

Should I rent or sell my South Florida home?
Compare two real numbers, not a feeling: what the home would net if sold today, and what it would net each year as a rental after taxes, insurance, association dues, repairs, vacancy and management. Selling usually wins when you need the equity, the home needs work, or the rent barely covers the costs; renting wins when the rent clears the costs comfortably and you can carry the home through a vacancy. In South Florida the insurance bill and the loss of the homestead cap often decide it.
How do I find out what my home would rent for?
Ask for a rental price analysis. A BreakThru rental agent reads the leases that closed near your home in the last six months, matched on size and type, and tells you the range and what moves it. Asking rents on listing sites overstate the market.
Can I rent my home for a year and then sell it?
Yes, and many owners do. Plan the timing with a tax adviser: the homestead exemption and the capital gains exclusion both depend on how long the home has been your residence and how long it has been rented.
Does BreakThru handle both?
Yes. The same conversation covers what the home would sell for and what it would lease for, and if you rent it we find and screen the tenant, write the lease and can manage the home.

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