Greetings all:
As I've mentioned before, I own a single-family home in the SF bay area (aka: "housing bubble ground zero), which I rent out. (I own my own home in addition.)
Some figures:
Purchase price five years ago: $129K
Selling price of the house next door (with one less bedroom and in poorer condition) $537K
Amount I owe on the mortgage (at 6%): $60K (I've been paying extra $200 per month on it.)
PITI Payment per month: $881.00
Monthly rental income: $1200.00
I've read other threads here on selling vs keeping the rental. Lots of good ideas, historical stoies, and "gut" wisdom. But I didn't find anything specific about how to do the numbers to compare options. How do I choose between:
a. X% profit now, after sales costs and taxes, to be invested somewhere else (if any other attractive investment was even out there right now)?
b. Keep the property and the mortgage (as originally planned) and let tenants buy the house for me.
c. Same as b except pay off the mortgage with the cash I have languishing in my account.
Can any of you "quants" out there help me to structure this question? What assumptions make sense? How do I answer the underlying, fundamental question -- when should a rental property owner's buy-and-hold plan be scrapped in favor of locking in a gain?
Many thanks for any wisdom,
Caroline
As I've mentioned before, I own a single-family home in the SF bay area (aka: "housing bubble ground zero), which I rent out. (I own my own home in addition.)
Some figures:
Purchase price five years ago: $129K
Selling price of the house next door (with one less bedroom and in poorer condition) $537K
Amount I owe on the mortgage (at 6%): $60K (I've been paying extra $200 per month on it.)
PITI Payment per month: $881.00
Monthly rental income: $1200.00
I've read other threads here on selling vs keeping the rental. Lots of good ideas, historical stoies, and "gut" wisdom. But I didn't find anything specific about how to do the numbers to compare options. How do I choose between:
a. X% profit now, after sales costs and taxes, to be invested somewhere else (if any other attractive investment was even out there right now)?
b. Keep the property and the mortgage (as originally planned) and let tenants buy the house for me.
c. Same as b except pay off the mortgage with the cash I have languishing in my account.
Can any of you "quants" out there help me to structure this question? What assumptions make sense? How do I answer the underlying, fundamental question -- when should a rental property owner's buy-and-hold plan be scrapped in favor of locking in a gain?
Many thanks for any wisdom,
Caroline