If you’re moving, no longer want to live in your primary residence, or are upgrading to a bigger home, converting your current house into a rental property remains a viable option. However, the financial landscape has shifted dramatically since 2015, and there are many more considerations to evaluate before making this decision.

Redmond property laws still mandate that a single-family home must remain a single-family home, even when rented out. The following updated guidance from local property management experts should help you determine if renting out your residence makes financial sense in today’s market

Is It Right For You in 2025?

The most critical factor remains whether converting to a rental property actually makes financial sense. With today’s higher mortgage rates and increased costs, the math has become more challenging than it was a decade ago.

The reality check: If you’re carrying mortgages on both properties, rental income must cover capital gains taxes, property taxes, insurance, maintenance, mortgage payments, and current mortgage interest rates of 6.5-7.5% for investment properties.

Let’s say you rent your Redmond home for $2,800 per month (current market average), pay 30% in combined taxes, and are paying 7% on a $600,000 new home purchase. In this scenario, your monthly rental income of $2,800 becomes $1,960 after taxes, while a $600,000 mortgage at 7% costs approximately $3,990 monthly in principal and interest alone.

2025 calculation

Your rental property would need to generate at least $4,500-5,000 monthly to break even on just mortgage costs, before factoring in maintenance, insurance, and property taxes. This is significantly higher than the current median rent of $2,801 in Redmond.

Exception

If you own your current home outright, can secure a low-rate consolidation loan, or the total rental gains minus taxes and maintenance exceed your new mortgage interest over your intended holding period, then renting may still make sense.


The six-year rule still applies: If you plan to move back into the residence within six years, you can avoid capital gains taxes on up to $500,000 in profit (married filing jointly), making the rental strategy more attractive.


However, in most 2025 scenarios where you’re purchasing a new primary residence, selling your current home and applying proceeds toward your new mortgage will likely save you money compared to becoming a landlord.

Redmond Rental Market Reality Check

Current market research is essential for accurate calculations. Redmond rental rates in 2025 range from $2,011 for studios to $3,381 for 2-bedroom apartments, while the median rent across all property types is $2,453.

Single-family homes typically command premium rents above apartment averages, potentially reaching $3,500-4,500+ monthly depending on size, condition, and location. However, this still may not cover the full cost of carrying two mortgages at today’s rates.

Key factors affecting your rental income:

  • Location within Redmond: Properties near tech companies or transit hubs command higher rents
  • Home condition and amenities: Updated kitchens, bathrooms, and smart home features are increasingly expected
  • Market competition: The Redmond housing market is competitive with homes selling in just 11 days, but rental demand can fluctuate seasonally

 

After accounting for vacancy periods, maintenance, property management fees (8-12% if outsourced), and taxes, plan to net approximately 60-70% of gross rental income.

Updated Considerations

Property Management Costs:

Professional management now costs 8-12% of monthly rent plus leasing fees, but includes services like 24/7 maintenance coordination, legal compliance, and digital rent collection that weren’t standard in 2015.

Technology Expectations:

Today’s tenants expect online applications, digital lease signing, electronic rent payments, and often smart home features. Budget $2,000-5,000 for initial property tech upgrades.

Legal Compliance:

Washington State has implemented additional tenant protection laws since 2015. Research current requirements for security deposit limits, notice periods, and just-cause eviction rules.

Insurance Costs:

Landlord insurance typically costs 20-30% more than homeowner’s insurance and is mandatory for rental properties. Understanding emergency repair responsibilities is also crucial – learn more about emergency repairs and response times for Washington landlords.

Making the Decision

Use this updated framework:

  1. Calculate your new home’s monthly mortgage payment at current rates (6.5-7.5%)
  2. Research realistic rental rates for comparable Redmond properties
  3. Subtract 30-40% from gross rent for taxes, vacancy, and expenses
  4. Compare net rental income to your new mortgage payment
  5. Factor in the opportunity cost of capital tied up in the rental property

Unless you own your current home outright or can secure significantly above-market rent, selling and applying proceeds to your new home purchase will likely be more profitable than becoming a landlord in today’s high-rate environment.

Ready to make the right decision for your property?

Get a free consultation with SJA Property Management’s experts – we’ll analyze your specific situation and help you determine whether converting to a rental makes financial sense or if selling is your better option.

If you decide rental property ownership is right for you, SJA Property Management offers full-service property management throughout the Seattle area, handling everything from tenant screening to maintenance coordination to legal compliance.

If you’re moving within the Seattle area, relocating out of state, or want professional guidance on whether rental conversion makes sense for your specific situation, contact SJA Property Management for a personalized analysis based on your property and financial circumstances.