Author Topic: Rent out or sell?  (Read 1268 times)

karlaeda

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Rent out or sell?
« on: January 08, 2018, 02:41:10 PM »
Hi there. I'm a long time reader, first time poster. I'm a bit at a loss as to what exact action to take at this point.

I am in a situation where my family (wife and daughter of 5 months) and I are moving-in with my parents. We are in our very early 30s. This is primarily so that we both can keep working (income and career growth) and grandma can enjoy her time with the kid while we are away. This is rather normal in my family and culture.

We live in San Diego, where the housing market and pricing is through the roof. We own our single family home and it is about 10-11 miles away from our work places. The place where we will be moving in is about 20 miles away from work. I often work remotely, while my wife has to hoof it to her job every day.

We bought the house three years ago for about 500k, the place next door to us just went up on sale for 680k, this is roughly what I can expect to get for our house as well. EDIT* The rent income would probably be around $300-400 a month.

Our thought was to move closer to work to a highly demanded area (read expensive), with walking distance to our offices and shops and also extremely good schools near UCSD campus in about a year or two, if the market cools down a bit.

With the market as hot as it is now, I am wondering if it is worth selling the house instead of renting it out. We have opted to sell our first condo in 2015 and in hindsight, would have probably made more money on it if we did not. I also understand some of this is speculative, but a decision has to be made nonetheless. If we were to sell, the funds would simply go into the index funds and sit there until the next house purchase, but doing so would also de-diversify our portfolio as all our investments would be in mutual funds.

I'm open to any suggestions, criticism, and so on.

Thank you very much.
« Last Edit: January 08, 2018, 02:52:17 PM by karlaeda »

lbmustache

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Re: Rent out or sell?
« Reply #1 on: January 08, 2018, 07:26:06 PM »
How long do you expect to live with your parents? Do you think there is a chance that moving in with parents may not work out? It might be worthwhile to rent the place for one year just in case things don't work out.

The only other question is do you want to be, or do you enjoy being, a landlord? Lots of things to think about in that sense.

If your net profit, before taxes and accounting for repairs or other shit hitting the fan, is only ~$300 in coastal Southern California, I would probably not rent and instead sell the place. 

better late

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Re: Rent out or sell?
« Reply #2 on: January 08, 2018, 07:36:39 PM »
Hi there. I'm a long time reader, first time poster. I'm a bit at a loss as to what exact action to take at this point.

I am in a situation where my family (wife and daughter of 5 months) and I are moving-in with my parents. We are in our very early 30s. This is primarily so that we both can keep working (income and career growth) and grandma can enjoy her time with the kid while we are away. This is rather normal in my family and culture.

We live in San Diego, where the housing market and pricing is through the roof. We own our single family home and it is about 10-11 miles away from our work places. The place where we will be moving in is about 20 miles away from work. I often work remotely, while my wife has to hoof it to her job every day.

We bought the house three years ago for about 500k, the place next door to us just went up on sale for 680k, this is roughly what I can expect to get for our house as well. EDIT* The rent income would probably be around $300-400 a month.

Our thought was to move closer to work to a highly demanded area (read expensive), with walking distance to our offices and shops and also extremely good schools near UCSD campus in about a year or two, if the market cools down a bit.

With the market as hot as it is now, I am wondering if it is worth selling the house instead of renting it out. We have opted to sell our first condo in 2015 and in hindsight, would have probably made more money on it if we did not. I also understand some of this is speculative, but a decision has to be made nonetheless. If we were to sell, the funds would simply go into the index funds and sit there until the next house purchase, but doing so would also de-diversify our portfolio as all our investments would be in mutual funds.

I'm open to any suggestions, criticism, and so on.

Thank you very much.

Hi! Can you clarify the $300-400 a month?   What are your monthly expenses on the house?

FINate

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Re: Rent out or sell?
« Reply #3 on: January 08, 2018, 07:39:17 PM »
If your net profit, before taxes and accounting for repairs or other shit hitting the fan, is only ~$300 in coastal Southern California, I would probably not rent and instead sell the place.

I agree. And no point in worrying about prices going up or down after you sell. The future is unknowable, so make a principled decision (doesn't sound like you really planned on being in the landlording bus.), and move on. Otherwise you're just going to make yourself crazy.