Should You Sell Your First Home… or Keep It as a Rental?

Move-up buyers in Central Texas often come to me with the same anxious expression and the same tangled question: “Should we sell… or would it make more sense to rent it out?” And before we even talk about showings or upgrades or what interest rates are doing this week, I usually say the same thing: you have more options than you think. We’ll slow it down, look at the numbers together, and figure out the next best move for your family. Not the forever move. Not the perfect move. Just the next right one.

Why This Decision Feels Harder Than It Really Is

This decision feels bigger than it actually is because if you’re a homeowner, you probably haven’t rented a home for a while. The rental landscape in Central Texas likely seems like a completely different universe now. The technology is better. Screening tools are more robust. Tenant expectations have evolved. And on the selling side, the world is equally confusing. We’re no longer living in the 2021–2022 frenzy where anything with a door would sell in a bidding war. But we’re also not in the national doom-and-gloom narrative you might be seeing online. San Marcos is sitting in a balanced sales market with strong rental demand and it is entirely navigable with a strategy.

When clients ask whether it makes more sense to sell or rent, I walk them through the same hierarchy of questions. First, what would the cash flow look like if we rented it? What’s the rental demand for your layout, location, school district, and condition? What would your timeline and net proceeds look like if you sold today, and how would that impact your next purchase? From there, we talk about lifestyle. How do you want your family to live in the next season of your life, and does that require freeing up equity now or holding onto the asset for a few more years? We look at emotional readiness, long-term plans, interest rates, maintenance costs, and how important staying in a particular school district is to you. None of these questions live in a vacuum. They inform each other, and they build the bigger picture.

THE LOCAL MARKET REALITY

A lot of people don’t know how strong the San Marcos rental market actually is. Peak leasing season is June and July, when demand surges and quality listings move quickly. You can pre-market as early as March or April by using strong photos and virtual tours. If the home doesn’t lease at a higher price, you adjust toward the mid-range as peak season hits. And if you haven’t secured a tenant by September, you may need to go slightly below peak pricing to keep cash flow predictable. The important part is that this isn’t a failure. It’s strategy. You’re positioning the home to stay occupied, which is the whole point if you’re playing the long game.

Let’s bring in a simple hypothetical scenario to show how this decision plays out.

Imagine your current home could sell for $365,000. After your mortgage payoff, commissions, and closing costs, you walk away with around $62,000. That cash can strengthen your position on your next home, lower your monthly payment, or create breathing room if you’re making a bigger move.

Now imagine renting out that same home. Maybe it leases for $2,000 a month. Your mortgage, taxes, insurance, and escrow total $1,600. After accounting for a maintenance buffer, you might only cash flow around $75–$125 a month. Modest, yes. But your tenant is covering almost your entire mortgage, you’re keeping the asset, and the property continues appreciating over time. In five years, that equity growth combined with loan paydown tells a very different wealth story. And when the market leans back toward sellers, you have even more options again.

CASE STUDY: CHOOSING THE LONG GAME

This is exactly what happened with two recent clients of mine. Before they were clients, they were friends—we taught together years ago—and I felt deeply honored that they trusted me to guide them through such a big transition. Their home was getting tight. Closets were overflowing, schedules were busier, and with an older child already in school, staying in the same district mattered. We sat down and walked through every angle: what they’d likely net if they sold, what their cash flow would look like if they rented, how the market was shifting, and how interest rates might impact their next purchase.

They decided the most stable move was to buy first, move into their new home, and then list the old one. It was a smart, measured plan. But as the market softened more quickly than expected, their listing — originally well-priced — became overpriced as the ground shifted underneath us. We pivoted, ran new numbers, and made a strategic decision to rent instead of chasing the market downward. The home leased quickly, covered the mortgage, and protected their long-term equity. Their new home gave them the space and lifestyle they needed immediately, and their old home became an asset that will continue building value long after this season of life.

This is what I want people to understand: renting out your home is not a consolation prize. It’s not “plan B.” In a strong rental market like San Marcos, buy-and-hold is a legitimate long-game strategy. You continue building equity. Your costs are covered. You gain flexibility. And you position yourself to make smart moves in future markets.

Whether you’re considering selling or renting, you don’t have to make this decision blind. You should have clear numbers, honest guidance, and a plan that supports your family’s next chapter. If you want to run scenarios for your own home, send me a message. I’ll walk you through the numbers so you can move forward with clarity. Book a Strategy Call.