Author Topic: Sell now or convert to rental  (Read 367 times)

smb232

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Sell now or convert to rental
« on: January 21, 2019, 09:54:02 AM »
We currently own a SFH that we have been living in for ~2 years (it's in a suburban community with no walkability). Given our desire to live more cheaply and near to public transport (to get rid of a car), we are considering selling the house or converting it to a rental.  We want to move back into one of the units in a 2-flat that we own in a walkable area nearby.

I'm trying to figure out if we should sell and pay the costs of selling (~8-10 percent is standard by us) or convert to a rental for a while and hope the property continues to appreciate with inflation.  Details below

Purchase price - $277,000 (we paid less than the market at the time due to it not being officially listed) We put 5 percent down on a mortgage at 4.75% interest. Itís not very old and maintenance issues have been none so far.

Likely current sales price - $285,000 (the market has not been doing well given some issues with the schools that are currently being fixed, but houses until $300K sell better since the average home price in the town is $500K)

Anticipated Rent = $2200/month
Gross Rental Income = $24,200/year
Operating expenses = $10,500/year
Net operating Income = $13,700/year
Cash flow = $-2800/year
New equity in home ~$4500/year

So, should I sell and get out now or should I rent for a couple years to recoup some of the fees associated with selling. I expect it will break each year and we only have 13K into the house at this point.
Any insights appreciated.

tralfamadorian

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Re: Sell now or convert to rental
« Reply #1 on: January 21, 2019, 10:58:56 AM »
I would sell. There's no reason to feed the alligator hoping for a non-zero return in the future along with the headaches of being a landlord.

nereo

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Re: Sell now or convert to rental
« Reply #2 on: January 21, 2019, 05:08:58 PM »
Sell.  There's no way I'd accept $2,200 in rent and ~-$200 negative cash flow if I could have money in hand.  You might have no maintenence issues now, but you will in a few years, almost certainly. Sell sell sell. 

ETA:  Having lived there the previous 2 years you won't even pay capitol gains if you sell it soon.  Yet another reason to sell.
« Last Edit: January 22, 2019, 08:29:29 AM by nereo »

theoverlook

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Re: Sell now or convert to rental
« Reply #3 on: January 22, 2019, 08:16:31 AM »
Sell sell sell.

waltworks

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Re: Sell now or convert to rental
« Reply #4 on: January 22, 2019, 11:40:59 AM »
Another vote for sell. There is not much to gain and a lot potentially to lose here by renting.

-W