Hi there!
Our family is growing and we're looking to move soon to accommodate. We just finished saving 20% for a downpayment on the next place, so now we're trying to decide on renting or selling our current condo. Here are the specs:
Location: Southern California, 1 mile from the beach.
Type: 2 bed, 2.5 baths, townhome, 2-car garage, good schools
Market Value: $565,000
Original Purchase price: $450,000
Original Mortgage Amount: $405,000
Interest Rate: 3.6%, flat
Mortgage Term: 30 years
Term remaining: 30 years (just refinanced)
Amount remaining on mortgage:$388,000
Gross Rents: Based on recently posted rentals in our condo complex, I think we could get at least $2800/mo, maybe $3,000/mo.
Principal and Interest: $1,764 (roughly $600 principal)
Taxes and Insurance: $519
HOA costs: $425
Deferred maintenance notes: None. We renovated the whole place recently, no special assessments on the horizon
Selling costs: Our realtor quoted us about 6% for total selling costs (2.5% to each realtor + fees, I guess that's the norm for this price range in the area)
I know it doesn't meet some of the typical rules of thumb for rentals, but I still think it might be worth keeping. I'm curious if you agree. I'm happy to manage the property (very handy, flexible job, will live nearby, and have some experience). Tenant-favoring California laws add some additional considerations.
The thing that kills me with selling is the 6% selling cost, actually eats up about 19% of our current equity $34k/$177k, and I like that we're locked into "cheaper" property taxes since they are capped at 2% annual growth. I figure it's not amazing as a rental for the immediate term, but might be nice in the long-term.
What do you think you'd do in this position?
edit: removed some unnecessary info.