We are planning to move and currently have a mortgage on our house. We both love our house and have various scenarios about what to do with it in the short and long term.
Specs:
850 sqft rowhouse in a desirable neighborhood
Purchase price (2011): $257,000
Current estimated value: $310,000
Outstanding mortgage principal: $184,084 @ 3.5% (~17 years)
P&I: $1212
T&I: $393
Scenario A: Rent to long-term tenant
I did some back-of-the-envelope calculations for renting our house to a long-term tenant. Here's what i came up with
Monthly Expenses:
T&I: $393
Management fee (10% rent): $150
Mortgage: $1212
Vacancy (10% rent): $150
Repairs: $150
TOTAL EXPENSES: $1905
Monthly Income:
Rent: $1500
Equity: $600
TOTAL EQUITY: $2100
Net Income: $195/month, $2340/year
I'm not sure if most people calculate their net income from rental properties this way, especially with respect to equity.
The pros of this scenario are that we keep the house, which we love, and could eventually move back at some point in the future. The cons are that we wouldn't have access to the house in the short term for trips back to our current city.
Scenario B: Short-term rentals/AirBnB
I haven't calculated the expenses of this scenario because i'm not sure i have a good handle on the demand for short-term rentals in my area. We would hire a manager for the house, and i'm also unsure if they will cost more than your typical property manager. My uneducated guess is that we would break even (accounting for equity gain). The pros of this scenario are that we would have access to the house whenever we wanted to be in town. The cons being that the more time we spend in the house the less we earn from rental and wear and tear could be an issue with short-term renters.
Scenario C: Sell house
We love this house, but it's entirely possible we may never want to move back depending where life takes us. The house has appreciated some, but it is also quirky and not updated, so it will not fetch as much as some comparable neighborhood houses with full gut-jobs. If we sell, we can expect to pull about $100k out in current equity, which would could use as a downpayment on a different house or just sock away in investments. Another pro of this option is that it's one less thing to worry about/manage in our daily lives.
I'm legitimately torn with these options. Does anyone have perspective on any of these that might help tip us in one direction or the other?