Author Topic: To sell or turn into a rental...  (Read 1925 times)

dmoon

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To sell or turn into a rental...
« on: August 09, 2014, 06:41:13 AM »
My current home is paid for.  I am moving out of state in just under a year and am contemplating selling my current abode outright to make a large contribution towards to the new home or keeping it as a rental to make for a near wash as far as a mortgage goes.  Factors to consider:  *Having a rental pay off a mortgage and owning two homes at retirement is a huge plus. *Having the cash from selling the property and investing it is a huge plus.
Where is America heading?  Do I need cash in the bank (or personal vault) or property, which could be better than currency given the state of things...
What do you think?
« Last Edit: August 09, 2014, 11:40:24 AM by dmoon »

chasesfish

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Re: To sell or turn into a rental...
« Reply #1 on: August 09, 2014, 10:16:37 AM »
What could you sell the house for and how much does it rent for a month.  If you can't get 0.75% of the property's value in monthly rent, it's more economical to sell.

dmoon

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Re: To sell or turn into a rental...
« Reply #2 on: August 09, 2014, 11:01:49 AM »
In Houston, housing is very inexpensive.  I can get $135K for this home.  4bdrm 2bath, 2 car detached, 1823sq ft.  I can rent easily for $1200 and keep it occupied.  The budget (top) for a new home in other state is $200K.  I'm finding very doable homes in the $180's.  My terms would put me at $1290/month in new home, at top of budget.  Thanks for the reply.  What do you think? 

Rezdent

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Re: To sell or turn into a rental...
« Reply #3 on: August 09, 2014, 11:24:16 AM »
I'm curious.  You reference 1200 as rent as financing your new mortgage but are you counting costs against it?

What will running costs look like for renting - property taxes (high for our area), would you use a property manager, will you need to put money to get it in shape (paint, maintenance)...etc?

dmoon

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Re: To sell or turn into a rental...
« Reply #4 on: August 09, 2014, 11:38:12 AM »
I just put $30K of updates on the house.  The foundation was repaired 5 years ago, guaranteed for another 10.  I have electrician and general handyman available.  Electrician & handyman are on-call, of course.  Property manager is TBD.  I have many relatives living in close proximity who have lived in the home at one time or another and would keep a check on the place.  A professional property manager, I would need to price.  Property taxes = one months rent.  All in all, it would be 11 months of income, 1 month of property taxes.  The home is in good repair, for now.  Thank you.

Rezdent

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Re: To sell or turn into a rental...
« Reply #5 on: August 09, 2014, 12:20:18 PM »
I did this with my home when I moved.  We net less than we planned but still it is good income and has outperformed the stock market.
The main reason that I rented was because I have plans to move back when I retire. Overall it's been a good decision for us - partly because we plan to move back someday.
The worst part (for me) is seeing that renters do not care about the landscaping or they make unauthorized changes that I hate.  I've lost trees because they got no water during the drought.  One tenant decided to put asphalt on part of the driveway which I will need to tear out.  I am too emotional about my house.  If these things will bother you just know that they will happen.  You take the repairs out of the deposit but it happens.

The plus side of renting is you can change your mind and sell if you don't like it, whereas selling is permanent.

We use a RE company to determine rental rates, show the property,  run background checks, provide leases and negotiate renewals.  This runs us about 1 month's rent but has been money well spent.

We do the "issues" of repairs and maintenance ourselves.

We've had periods of up to 5 months of vacancy to repair damage from previous tenants and get new tenants.
We keep a sizable cushion to pay our new mortgage during vacancies - and we've had to use it several times.