Author Topic: Case Study: Rental from across country?  (Read 557 times)

marylandfire

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Case Study: Rental from across country?
« on: December 13, 2018, 06:53:30 PM »
Just a little background information. I currently live on the east coast and am moving back to California after being out here for the past four years. We bought a house when we moved out here and I am trying to figure out whether to sell it or rent it out from across the county. I am thinking about going with a property management company as I am not sure I want to have to manage it from California.

Thanks for any thoughts or comments!

Market Value: $310,000
Original Purchase price: 270,000
Original Mortgage Amount: ~250,000
Interest Rate: 3.75%
Mortgage Term: 30 years
Term remaining: 26 years
Amount remaining on mortgage: $230,000
Gross Rents: $2200
Principal and Interest (the P&I of your PITI - should match with the above info):  1146
Taxes and Insurance (the T&I of your PITI): 341
HOA costs:141/month
Deferred maintenance notes: none, remodeled when we moved in (spent 25k)
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.):

Cwadda

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Re: Case Study: Rental from across country?
« Reply #1 on: December 13, 2018, 07:30:33 PM »
You would need a gross rent of $3100/month to entertain the idea as a rental property. Other reasons to sell include:

  • If you've lived there for 2 out of the last 5 years, you won't be subject to capital gains taxes
  • If you know the market value already, you could consider FSBO and saving around $9,000


Therefore, my vote goes to selling it, and without using a broker if you can swing it.
« Last Edit: December 13, 2018, 07:32:19 PM by Cwadda »

CptJack83

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Re: Case Study: Rental from across country?
« Reply #2 on: December 14, 2018, 10:34:44 AM »
I second everything Cwadda posted.   Doesn't seem like there is enough positive cash-flow to justify keeping the property.   You're basically breaking even once you factor in property management and CapX.

If you didn't own the property and just had the net equity in your bank account, would you buy it now assuming you could get the same terms?

Lets say you lived in California and didn't own a house on the east coast.   A friend approached you and said, "Hey,  if you give me $60,000, you can take over my rental property on the other coast, that assuming you are 100% occupied breaks even."  I'm pretty sure you wouldn't hop the opportunity.

So sell the house and move back to Cali.  If you really want to own an investment property, I guarantee you can find a better investment option that will be more convenient or more profitable elsewhere.


Most of the times, people in your situation keep their old home as a rental because it is a BAD time to sell.   If the value was way down, or you were underwater, there is a case to make that renting it out, even at a break even, gives you the chance to sell once the market improves.  But with it still being a decent enough market, and you being able to sell at ~15% more than you paid, i don't see why you would retain it.


Out of curiosity, what do you think are the 3 best reasons of why you should keep it?

AccidentalMiser

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Re: Case Study: Rental from across country?
« Reply #3 on: December 14, 2018, 10:39:59 AM »
I canít improve on the advice thatís been given.  The rental deal isnít sweet enough to make it worth renting when youíre 3k miles away.

Too much risk, not enough reward in my opinion.