Author Topic: Another sell or rent it out question  (Read 1406 times)

terra-fino

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Another sell or rent it out question
« on: October 02, 2016, 02:15:58 PM »
We are a retired couple (both 60 yrs old) with 330k invested in mutual funds and bonds. Our main property in No Cal includes our home and a mobile home that rents for $700 per month.
My question is should we sell our second home or rent it out. It could sell for $475k and it could rent for $2500/month. We still owe 25k on it. The mortgage is $400 a month. The rental income would cover our personal spending including the mortgage. The second house is located in northern SF bay area. Thank you!

Megma

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Re: Another sell or rent it out question
« Reply #1 on: October 02, 2016, 02:57:45 PM »
If it's worth over 400k and would only rent for 2500/month it does not sound like a good rental, the rent to price ratio isn't good. Are you sure that the rent could cover your spending, plus the maintenance, prop management fee, vacancy and taxes on the rental house?

terra-fino

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Re: Another sell or rent it out question
« Reply #2 on: October 02, 2016, 03:11:55 PM »
I'm sure the rent will cover everything except maintenance. I'm unsure how much to budget for maintenance of the rental properties. I'm investigating all of this. Obviously new to even thinking of getting into becoming a landlord. Cheers!

yddeyma

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Re: Another sell or rent it out question
« Reply #3 on: October 02, 2016, 08:04:50 PM »
Does not look like a good rental to me; potential monthly rent is only about 0.5% of the purchase price.  But to really be clear, you'd have to post things like average yearly maintenance costs, property taxes, insurance, etc. 

The real question is would you buy this house as a rental investment?  If the answer is no, then it likely does not make sense to keep it and use it as a rental just because you already own it. 

If you want to hang onto it for other reasons and rent it out to defer holding costs, that's a separate topic completely.

erutio

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Re: Another sell or rent it out question
« Reply #4 on: October 02, 2016, 08:20:11 PM »
So is your plan to sell this 475k property and then move into the mobile home?

Ensign1999

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Re: Another sell or rent it out question
« Reply #5 on: October 03, 2016, 01:10:28 PM »
There is quite a bit of information missing and some confusion.  How many homes/mobile homes do you own?  It sounds like three in total (your house, a second house, and a mobile home).

The house that you say could sell for $475k...is that what you paid for it, or what it is worth now?  If you purchased it 30 years ago for $100k and you could rent it for $2,500 then it might be a good rental.  Also how hot is the market?  If home prices are still going way up, then it might be worth hanging on to for a while.  You might also have to consider capital gains depending on how long you rent it for, how much you purchased it for and what you get when you sell.

Like others have said, more information on the properties would be helpful in giving opinions.  You have owned the properties so you should have an idea of what it costs to maintain them, taxes, ect. 

Cwadda

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Re: Another sell or rent it out question
« Reply #6 on: October 03, 2016, 03:37:00 PM »
I'd vote for selling it based on the information you've provided. It should at least follow the 1% rule (renting for 1% of its value).