Sell or Rent - Can anyone help with the math?

[gscengr]

I posted a similar tome previously (that after posting it, I didn’t even want to read) so I’m cutting the fluff and getting straight to the details:

Trying to decide to sell house or rent it out and want some advice.  Hopefully someone has a way to look at the numbers and compare.

Purchase price: $585K (purchased in 2005)
Realtor’s current assessed value: $450K – but she says the market in DC is doing really well and should continue to go up
So about $135K in the hole
Current interest rate: 3.375% (is an ARM)
Amount left on mortgage: $430K
Has been renting the last couple of years but is cash flow negative to a tune of about $600/month

This summer, my renters are moving out.  So do I sell and take the $140K loss or continue the $600/month negative cash flow?

Is there some math I should be using to evaluate which is a better financial decision?

Thanks to all!
(Thank you to ‘Advanced Reader’ and ‘Meadow Lark’ who trudged through my last post and gave me advice.  I heard you loud and clear.)

[Cecil]

It should be completely irrelevant to your decision what you paid for the house.

You can sell it for $450k - realtor's fees, which probably leaves you a wash against the mortgage. So the question is, do you walk away free and clear, or do you pay $600/month in the hopes that it goes up in value soon?

Think of it the other way around. Pretend you didn't own it, and were considering it as an investment. Would you buy it for $450k knowing it would be cash-flow negative to the tune of $600?

If you wouldn't buy it as-is, you should sell it.

[arebelspy]

...

If you wouldn't buy it as-is, you should sell it.

^^^ Exactly this. It applies to investments as well. (which a house is not)

I disagree with this as a general rule (especially for buying/selling homes).

I would posit that this is only in the case that you have equity.  OP may have a little bit, but will probably pay a little out of pocket at closing due to commissions and such.

However it's not that straightforward with an underwater property.  If you have to bring, say, 100k to closing then it's not as straightforward as you two imply.

In the case of selling something for a positive amount of cash, then yes, not selling is the same as buying, and you can ask yourself if you'd buy at that level.

An underwater car is the same issue - I don't think someone who owes 15k on a car worth 7k should only consider if they'd buy at 7k today, and if they wouldn't, use that as a reason to come out of pocket 8k..