Hello! My husband and I need some help deciding what to do with our house when we move next year.
Market Value: ~$420,000 (based on recent sales of comparable properties in the neighborhood
Original Purchase Price: $397,000
Original Mortgage Amount: $397,000
Interest Rate: 3.49%
Mortgage Term: 7/1 ARM
Term Remaining: 28 years; <5 years until adjustable rate begins
Amount Remaining on Mortgage: $378,700
Monthly Mortgage Payment: $2,512.83
Principal and Interest (the P&I of your PITI – should match with above info):
Monthly Principal: $676.93
Monthly Interest: $1,103.56
Taxes and Insurance (the T&I of your PITI):
Monthly taxes and insurance: $732.34
HOA Fee: $200/ month
Flood Insurance: $425/ year
Total Insurance (standard + flood) if we switched property to a rental: $3,307.00
Specific Question (s):
Should we rent the house on current 7/1 ARM, refinance and then rent the house, or sell it before moving in July 2019?
Estimated rent for this property is $2500/ mo based on neighboring rentals, so we would likely lose about $200/ month. This expensive house with no down payment is a relic from our ignorant pre-moustachian thinking 2 years ago. From what I have seen on this blog, properties with negative cash flows each month are discouraged.
On the other hand, we own property 3 blocks from downtown in Coconut Grove, which appears to be one of the most desirable locations in Miami and one that is undergoing significant development. There is a lot of development in the neighborhood, and properties are being built including office buildings and a mall on the bay as well as rebuilding the town center. We know (based on our neighbors) that there will be demand on the rental market for the house and we have an accurate assessment of the rent based on identical units in our small group of 6 townhouses.
Do we sell before we leave to avoid a rental with a loss per month, albeit one we can afford? Or do we hold on to the house given the location and all of the development? None of this factors into our FIRE calculations but we do have to make a decision before we leave town in 9 months and unlike yourselves we lack the knowledge to make the best decision. Thank you for your time!