Rent out my house or sell

[JohnGalt]

I have owned my home for 3 years. Bought for 190 and currently owe 170. Could sell for about 200, and after selling costs would essentially lose my down payment 5% and equity. Or, I put in another $10k in renovations and rent it out hoping to cover my ownership costs and earn free equity and hopefully the market goes up.

We want to move in the next two years or less. How do I decide which option?

 

[jerome len]

My vote is to sell..........unless you have professional help renting can be a serious money loser. People mistreat a home, miss rent and you have to follow the law in attempting to evict them......get sued if you do anything outside the "law" that you don't know regarding rental property. So, unless you have a good friend that will take care of upkeep, complete their own emergency repairs, pay their rent on time do't take the chance on losing a lot of sleep and potentially a lot of money. I really know...my Dad rented out his home to a "nice" young man without any money but with a couple little kids and starting a new job. They left him a filthy house, 3 months behind ni payments.......the house stank.....kids wrote with crayons on the wall. My Mom had warned him......but he didn't listen. I think he heard about this mistake until my Mom died 25 years later.

If I ever get into rentals, it will be in an apartment building large enough to have a property manager to take care of all the leases, payments, maintenance, repairs....etc. Good luck with your decision.....you can tell I really have a negative bias.....maybe someone else can tell the other "good" side of the story for you.

 

[ziggy29]

We're in the same boat. We're moving on the 21st and we're pondering the same thing. In reality, we'll probably put for sale or rent. Since we have no mortgage and we don't need the cash out of the sale of this house, we're pretty flexible, and even if we have to use a property manager to handle it all (no way we want to be absentee landlords three hours away), we'd probably still net over $200 per month after expenses, which is more than we'd get if we sold the house and put the proceeds in savings earning even 1%. Also, since we're not desperate to sell there's a part of us willing to wait and hope the market improves here.

If we needed the cash from this sale or if we had a mortgage, it would be harder to be this flexible, but right now our goal is to reduce the length of time this house is a "money suck" (still owned and vacant) as much as possible. Whichever we can do faster -- sell it or rent it out -- is fine with us.

 

[jkern]

I purchase rental real estate to make money (ROI), not hoping for capital appreciation. The question you have to ask yourself is: Right now if you didn't already own this house, would you buy it for $200K, invest $10K in renovations and rent it out hoping for capital appreciation? If the the answer is no, then sell!!!

 

[Meadbh]

I purchase rental real estate to make money (ROI), not hoping for capital appreciation. The question you have to ask yourself is: Right now if you didn't already own this house, would you buy it for $200K, invest $10K in renovations and rent it out hoping for capital appreciation? If the the answer is no, then sell!!!

+1

Some years ago I inherited a family home. Went through the same analysis. Decided to sell. Good decision: the very next year, the property market tanked. If I kept that property I would not be ER now.

 

[W2R]

I purchase rental real estate to make money (ROI), not hoping for capital appreciation. The question you have to ask yourself is: Right now if you didn't already own this house, would you buy it for $200K, invest $10K in renovations and rent it out hoping for capital appreciation? If the the answer is no, then sell!!!

+2 Renting it means that you would be trading the immediate hassle of selling, for the never-ending occupation of being a landlord. For some, it could be a great choice, but for others it could be a cop-out.

 

[ziggy29]

+2 Renting it means that you would be trading the immediate hassle of selling, for the never-ending occupation of being a landlord. For some, it could be a great choice, but for others it could be a cop-out.

Agreed. As I'd mentioned, in our case if we had a mortgage or we needed the cash out from the sale, we'd be selling all the way. But because we have no mortgage and we can create positive cash flow even after giving the property manager a cut, renting it now and hoping the market recovers later isn't a terrible thing, either. And some sales have come from renters who decided they'd like to buy it, so you never know...

If we were facing a negative cash flow situation because of a mortgage, I'd run, not walk, away and be committed to selling. Ones own specific situation can surely influence the decision.