Author Topic: Should I rent or sell? Denver Area  (Read 708 times)

slow hand slow plan

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Should I rent or sell? Denver Area
« on: February 12, 2018, 09:22:08 AM »
Hi Below are the details and let me know if you need more info. We are considering moving to a lower cost area near family. I am handy at fixing stuff but have never owned a rental. We would be too far away where i would most likely want to hire a rental company to manage it:

Market Value: 380,000 or more
Original Purchase price: 165,000 (2009)
Original Mortgage Amount: 155,000
Interest Rate: 3.5


Mortgage Term: 30 year 3.5%
Term remaining: 26 years (refinanced to a lower rate and to drop PMI a few years ago .
Amount remaining on mortgage: 142,000
Gross Rents: similar houses rent for around 1800  - 2000
Principal and Interest (the P&I of your PITI - should match with the above info): 3.5 no PMI
Taxes and Insurance (the T&I of your PITI): around 120 a month (we pay 910 every month to cover mortgage, insurance  and tax
HOA costs: no HOA
Deferred maintenance notes: new roof new windows new garage new water heater new siding, new doors  ....might need a new furnace in  3 - 10 years...
Anything else special or unique in regards to the numbers of the property : Denver Metro area huge increases since purchased desirable area near a nice part of downtown, highways,parks  etc...

waltworks

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Re: Should I rent or sell? Denver Area
« Reply #1 on: February 12, 2018, 12:32:13 PM »
Sell.

Would you buy it for $380k+ in order to rent it out for $1800 a month? If not, sell it.

-W

slow hand slow plan

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Re: Should I rent or sell? Denver Area
« Reply #2 on: February 12, 2018, 01:28:31 PM »
Thanks Walt!  That is how I was leaning but i know so little about land lording. I appreciate the advise.

GoldenCoStache

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Re: Should I rent or sell? Denver Area
« Reply #3 on: February 13, 2018, 08:56:47 AM »
Im in a similar situation... I am having trouble with giving up that gains tax or exchanging for a similar property as real estate is isnt cheap at the moment.

What will you/I do that returns as well as what you have now?

slow hand slow plan

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Re: Should I rent or sell? Denver Area
« Reply #4 on: February 14, 2018, 08:45:04 AM »
I am not sure either. I am looking at possibly moving to a lower cost area and buying a home...or stick it out for awhile until i can retire completely and then move and sell...

Rich on Money

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Re: Should I rent or sell? Denver Area
« Reply #5 on: February 16, 2018, 03:01:10 AM »
Your return on original investment is good, so you could rent it out, but your return on equity is low, meaning your not making use of all the equity you have.  Your equity is not being used and not making you any money.  You should sell which will get the equity out tax free and find a way to invest it, either in more real estate or perhaps in the market.  You could purchase more than one property with the money.

Another Reader

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Re: Should I rent or sell? Denver Area
« Reply #6 on: February 16, 2018, 04:59:21 AM »
Your return on original investment is good, so you could rent it out, but your return on equity is low, meaning your not making use of all the equity you have.  Your equity is not being used and not making you any money.  You should sell which will get the equity out tax free and find a way to invest it, either in more real estate or perhaps in the market.  You could purchase more than one property with the money.

You can't get your equity out "tax free" unless you exchange it for like kind property.  That does NOT mean putting it in the market.

Rich on Money

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Re: Should I rent or sell? Denver Area
« Reply #7 on: February 16, 2018, 05:36:47 PM »
If you've lived in the property 2 of the last 5 years, you absolutely can get your equity out tax free. 

Topic Number 701 - Sale of Your Home

If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home, provides rules and worksheets. Topic No. 409 covers general capital gain and loss information.

Another Reader

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Re: Should I rent or sell? Denver Area
« Reply #8 on: February 16, 2018, 05:47:06 PM »
Sorry, missed the part about it being owner occupied, mixed up the OP with the other poster..  If you decide to move, I would sell no matter what, as the numbers are not favorable.

pdxvandal

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Re: Should I rent or sell? Denver Area
« Reply #9 on: February 17, 2018, 04:28:26 PM »
I believe under the new tax rules you have to have lived in the property for 5 of the last 8 years to avoid paying capital gains taxes.

If you've lived in the property 2 of the last 5 years, you absolutely can get your equity out tax free. 

Topic Number 701 - Sale of Your Home

If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home, provides rules and worksheets. Topic No. 409 covers general capital gain and loss information.

Rich on Money

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Re: Should I rent or sell? Denver Area
« Reply #10 on: February 17, 2018, 06:07:49 PM »
Although both the Senate and House versions called for increasing the timeframe for exclusion of taxation to 5 out of the last 8 years, the final negotiated version kept it at the last 2 of 5 years.

That new rule would have hurt rich people.  You think the House and Congress would approve that?  That's like voting themselves a decrease in salary.

That can never be!

former player

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Re: Should I rent or sell? Denver Area
« Reply #11 on: February 18, 2018, 02:11:23 AM »
Deferred maintenance notes: new roof new windows new garage new water heater new siding, new doors  ....might need a new furnace in  3 - 10 years...

If you've lived in this property for 8 years and haven't done any of this work you are not cut out to be a landlord, let alone a long-distance landlord.  Sell.

Ask me how I know.
Be frugal and industrious, and you will be free (Ben Franklin)

clarkfan1979

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Re: Should I rent or sell? Denver Area
« Reply #12 on: February 19, 2018, 12:48:23 AM »
You could technically rent out the house for 3 more years and then sell while still avoiding capital gains.

If you rent it out you need to take care of most of the deferred maintenance and "bullet proof" the house.

I manage two rentals by myself from a distance. It's possible.

Advances in technology over the past 10 years has made it more realistic to manage property from a distance. Old timers will tell you it's not possible.