Author Topic: Case Study: Buy or Sell  (Read 1073 times)

RLTW

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Case Study: Buy or Sell
« on: April 28, 2014, 03:04:09 PM »
Market Value: Estimated at $235,000
Original Purchase price: $243,250
Original Mortgage Amount: $194,600
Interest Rate: 3.875
Mortgage Term: 30yrs
Term remaining: 28yrs
Amount remaining on mortgage: $181,700
Gross Rents: Estimated at $1500/mo based on limited comps; still researching our rental market. Most optimistic estimate is $2k/mo.
Taxes and Insurance (the T&I of your PITI - the P&I we'll figure out from the above info): $240; this reflects recent increase to tax.

HOA costs: $280 annually
Deferred maintenance notes: Will need new AC unit within 5 years.  Roof only 3 years old.
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.): Nothing.


arebelspy

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Re: Case Study: Buy or Sell
« Reply #1 on: April 28, 2014, 05:59:37 PM »
If you don't have any desire to be a landlord, sell it.  You won't have any taxes to pay, you'll be able to cash out about 30k that you can invest elsewhere.

If you want to be a landlord and are planning to acquire more, I'd lean towards keeping it for the experience and the long term inflation hedge via that super low mortgage.  It's probably right around break-even cash flow wise, maybe slightly worse, and should be positive if you're managing it yourself.

It's not a clear cut screaming keep or sell either way.  I certainly wouldn't buy at that price, and in a vacuum selling is probably more optimal math-wise, even with frictional costs, but it's close enough that it'll come down to your goals and preferences.
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RLTW

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Re: Case Study: Buy or Sell
« Reply #2 on: April 28, 2014, 07:53:29 PM »
Thanks for the advice!