Author Topic: Case Study: 2nd Property in San Diego - Sell or Rent?  (Read 669 times)

terrifictim

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Case Study: 2nd Property in San Diego - Sell or Rent?
« on: April 19, 2018, 09:10:10 AM »
I put this question in my case study, but figured I should probably put this in the real estate section as well.

Both my fiancee and I had individually bought townhouses in San Diego before we met each other. Now that we're planning into moving into one place, I'm looking for advice on what to do with the 2nd property. Our places are about 40 minutes away - she is a teacher so we are hopeful she can move districts. My office is only 3 miles from where I live so it makes it really advantageous to make this our residential property.

Property 1. 2BR/1.5BA (1172SF) Townhouse
Market Value:   $385,000 (Zillow)
Original Purchase price:   $289,000
Original Mortgage Amount:   $231,200
Interest Rate:   3.75%
Mortgage Term:   30 years
Term remaining:   27 years, 1 months
Mortgage Remaining:   $199,845.64
Estimated Rent:   ~$2,200/month
Principal and Interest:   $1,070.72
Taxes: $3,100/yr
Insurance:   $1,060/yr
HOA costs:   $405
Deferred maintenance notes:   HOA covers all exterior. Roof just replaced via HOA. Putting aside $200/month to cover expected maintenance in future.
Other notes:   This home is in San Diego, CA. Location is a very desirable school district and most properties in this area are 750k-1.5M range. Most condos in this area are currently in the 350k-450k range.

Property 2. 2BR/2BA (936SF) Townhouse
Market Value:   $317,500 (Zillow)
Original Purchase price:   $251,000
Original Mortgage Amount:   $225,000
Interest Rate:   3.75%
Mortgage Term:   30 years
Term remaining:   28 years, 1 months
Mortgage Remaining:   $218,115.52
Estimated Rent:   ~$1,800/month
Principal and Interest & Taxes:   $1,369.80/month (includes $50 in PMI) that will be removed in 1 month once we get an updated appraisal to lower the LTV ratio.
Insurance:   $660/yr
HOA costs:   $330
Deferred maintenance notes:   5k in plumbing performed when place bought.
Other notes:   This home is in San Diego, CA. Location is close to beach.

Other pertinent info (copied from case study). We will be making about $165k net from salary. We are fully funding all tax advantage retirement accounts (my 401k + her 403b and 457). We have the two mortgages + her car loan of $15k as our only liabilities. Neither of us has previous experience with property management. Once we fully move in and combine everything, I expect a savings rate around 50%.

My impression from reading online is that this is a slam dunk decision to sell. What say you?

Kierun

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Re: Case Study: 2nd Property in San Diego - Sell or Rent?
« Reply #1 on: April 19, 2018, 11:27:50 AM »
I would sell, based on the current market value it performs poorly as an investment property.  The estimated rent is far too low for the value of the property, you're better off investing that money elsewhere. 

patchyfacialhair

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Re: Case Study: 2nd Property in San Diego - Sell or Rent?
« Reply #2 on: April 19, 2018, 03:21:03 PM »
Sell it.

Life would be simpler not having to worry about being a landlord. Also, it would stink from a rate-of-return perspective when you account for maintenance, vacancy loss, and possible management fees. Congrats on the engagement!

tralfamadorian

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Re: Case Study: 2nd Property in San Diego - Sell or Rent?
« Reply #3 on: April 19, 2018, 06:34:40 PM »
Sell it. With those numbers you would be running in the red every month.