"Deciding what to do with your home is more than a mathematical decision," says T.J. Williams, financial advisor and regional vice president of the Wealth Enhancement Group in New York." There is an emotional conversation to be had about whether you want to be a landlord and the risks and rewards of both options."

The hassles of being a landlord can be mitigated by hiring a property management company, but that doesn't completely eliminate any market headaches or the risk of a lack of tenants, Williams says.

In Phoenix, the influx of corporations and their executives means there is a strong market for luxury rentals, said Sacha Blanchet, a real estate agent with Coldwell Banker Real Estate in Phoenix.

"A lot of people decide to use their luxury homes as rentals when they relocate because their mortgage payments, especially if they have a low interest rate of 3 or 4 percent, can be covered by rent," Blanchet said." Short-term rentals are also an option, but in Phoenix there has been a significant increase in mandatory fees for short-term rentals, and most homeowners prefer long-term renters."

In the Tampa, Sarasota and St. Petersburg, Florida, areas, luxury homes are in high demand and low supply, both for rent and for sale, said Liane Jamason, broker/owner of Corcoran Dwellings in Sarasota, Fla.

"Homeowners can sell for a good price right now, often with multiple bids and over the asking price," Jamason said." But there are also a lot of professional athletes and millionaires from other states who are relocating to the area or want a second home but prefer to rent and get to know the area before they buy, so renting can be lucrative."

Most people want to sell and finish their property rather than take on the responsibility of being a landlord, especially if they can get a good price, she said.

"If you own an apartment, you should have your agent look at how many units are available for rent or sale in the community," Jamason said." If you have five other people renting in your building, you may not get the rental income you want."

Landlords who become landlords need to take a variety of steps to ensure they meet the expectations of potential tenants, comply with local rules and maintain their properties to keep them rented and retain their value.

"Maintenance costs will be higher on larger or nicer homes because if you need to replace something, you'll want it to be of equal quality," Williams says." If you have a pool and extensive landscaping, you need to pay for their maintenance because you usually can't hold your tenants accountable."

In some jurisdictions, he says, you need a business license or permit to rent out your property.

"You need to hire an attorney to make sure the lease protects your interests," Williams said." You'll also need to review your mortgage documents and possibly contact your mortgage company to let them know you're not using the house as your primary residence. In some cases, this may trigger the need to refinance an investment real estate loan."

Your homeowner's insurance policy also needs to be updated to a landlord's policy. Williams recommends purchasing an umbrella insurance policy for additional liability coverage.

The biggest risk, Williams says, is that you won't have long-term tenants, or that your tenants won't pay. Even if you don't have a mortgage, there will be carrying costs such as taxes, insurance and repairs. He recommends setting aside at least four months of these costs in case you don't have a tenant.

Turning over landlord responsibilities to a property management company may seem like the best solution, but "there's no free lunch," Blanchet says.

"Even with a property manager to handle the day-to-day, you'll need to be alerted to problems as they arise and oversee repairs or decide whether to repair or replace things," he says.

In addition, you'll pay a significant fee, depending on how the terms of your lease are structured and what services you request.

"Property management fees are usually 10 to 15 percent of the monthly rent," Jamason says." It can be higher if you want to hold the manager more accountable."

For short-term rentals, expect to pay 12 to 16 percent of the monthly rent, Williams says. property management fees for short-term rentals can be as high as 25 percent in Phoenix, Blanchet says.

If the value of your property has increased significantly since you purchased it, you'll want to consult a tax advisor before choosing to rent it out, Williams said.

"The capital gains tax exemption for profits up to $250,000 for an individual or $500,000 for a couple depends on the home being their primary residence for at least two of the last five years," Williams said." If you have a large gain in equity, you may have more of a financial incentive to sell than to rent."

In some cases, he says, you can replicate the capital gains tax savings through rental income, but the longer you hold it, the higher your equity may be when you sell.

Consult a tax advisor to understand the implications of converting a primary residence to an investment property, Williams suggests.

Blanchet says homeowners should estimate their return on investment for rentals or sales.

"Many people like the idea of earning rental income and owning properties that will appreciate, but others prefer to take their profits and invest them now in other places where they think they will get a higher return," he said.

Jamason has seen more interest in upscale rental properties recently.

"More people now like the security of holding real estate for the long term because of the volatility of the stock market and nervousness about the banking crisis," Jamason said.

On the other hand, there is always the risk that property values could fall.

"When you turn your primary residence into a rental property, you decide it's the best use of your resources," Williams said." If it's in the right location and you find good tenants who pay on time, that may make sense. But all real estate is local, and you really need to consult with a local market expert."

It's also important to consider your decision within the context of your timeline.

"If you plan to move back to that area and live in the house again, or if your kids might want the house, that's a reason to rent," Williams says." If you see it as extra income in retirement, then you might want to evaluate whether it makes sense to sell now and buy a different rental property that might be more profitable or have more potential tenants."

In a hot rental market, the benefits of renting are more likely to outweigh the benefits of selling, but it's always wise to take a step back and review all the ramifications of your options.