Author Topic: Case Study - Sell or Rent  (Read 1016 times)

MrFrugalChicago

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Case Study - Sell or Rent
« on: September 16, 2014, 02:27:15 PM »
I have a condo I need to unload. I have been trying to sell it for 2 months without much luck. I don't HATE the idea of becoming a landlord, but if I could sell it for a fast lump sum, I am happy to take the money and invest it in my new house + savings. Considering if I should also list it for rent, or hold out and wait for a sale.

Stats:
Paid: 310k
Mortgage: 270k @ 3.625%
Monthly carry cost (mortgage + insurance + condo fee + taxes) ~2k
Potential Rent: 2.8-3k
Current sale price: 400k


So if I sell at current listing price I make a cool 90k - selling costs. Seeing as it hasn't sold in 2 months, I assume I will not get the full 400k. 

Or I can rent. Clearly buying a place new for 310k to rent for 2.8-3k is no good - but I do already own it and have a fairly good interest rate. I am not sure exactly how to figure vacancies and stuff, but I assume I should net a very slight profit at the end of the year if renting it, and will continue to build equity in the place.


Thoughts?

waltworks

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Re: Case Study - Sell or Rent
« Reply #1 on: September 16, 2014, 06:03:04 PM »
You're pretty close to 1% rule on your original purchase price but not on your (maybe unrealistic) sale price. I'd drop the price $20k and give it another month, then take a hard look at the market if you don't have more offers and strongly consider renting it, assuming you don't desperately need the money for anything. You have another 3 years before you'll get hit with capital gains on the sale so there's no rush and you won't be losing money on the place.

-W