Author Topic: Case Study: Sell or Rent in up-and-coming NC town  (Read 2503 times)

StarBright

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Case Study: Sell or Rent in up-and-coming NC town
« on: December 18, 2015, 12:06:21 PM »
Hello All,  I'm mostly writing this because we weren't even contemplating being landlords for at least another decade (2 busy jobs, small children etc) but life circumstances have made this a possibility and I'm not sure how to even begin thinking about it.

Long story short- this summer my academic husband got a job. We had one week to pack up our life and move several states away. Luckily a good friend needed a place to live so she rented our home for under market value on a month to month basis($700 a month).  Since everything was such short notice, we didn't need to worry about the house at all and it all worked out great. She just informed us that she found a job and will moving out in 2 months. Now we have to think about what to do with the house.


Market Value: $180k (per zillow- other houses on our street have sold for more recently so I'm not sure what a good number is)
Original Purchase price: $168k (in 2009)
Original Mortgage Amount: $123k (this was a 2012 refi)
Interest Rate: %3.75
Mortgage Term: 20 years
Term remaining: 16 and change
Amount remaining on mortgage: $107k
Gross Rents: going rate seems to be $1000 - $1200 a month in our area
Principal and Interest (the P&I of your PITI - should match with the above info): P:$393, I$335 per month
Taxes and Insurance (the T&I of your PITI): T approx:125, I: $40.91
HOA costs: $165 a year
Deferred maintenance notes: Will likely need a new HVAC in 3-5 years, could use new carpet, kitchen is definitely mid 90s
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 majorly special but a nice starter house in the triangle area of NC. The small town that we are in is starting to get some major press as a food/culture destination (NYT just ran an article this week).

Just unsure if we want to deal with owning a rental from several states away. On the other hand - I won't even have the time to get there and prep the house for sale until the summer if we decide to sell it.

StarBright

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #1 on: December 18, 2015, 12:11:30 PM »
Also adding a note to say that our current living situation is likely to be renting for the next several years. I work from home and my husband is an academic. The tenure track seems to be disappearing and we are seeing most institutions in his field switching to 1 to 3 year contracts. Not comfortable buying a new house in that situation.

Tbill

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #2 on: December 21, 2015, 01:51:55 PM »
Is your house in Asheville? Just curious, sounds like Asheville to me.

zephyr911

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #3 on: December 21, 2015, 02:37:13 PM »
I'd cash out. Rent is well below 1% of value (a good benchmark for a SFH) and will barely cover your debt service. What happens when it needs a new roof and you're out of pocket $10K?

Self-managing from several states away is a bad idea. I've tried it and it ended poorly. So if you do decide this is worth doing, do yourself a favor and take the 10% hit. It's worth it.

But anyway, bottom line: if you wouldn't buy it, you should probably sell it.

jnc

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #4 on: December 22, 2015, 05:40:56 AM »
Rent will barely cover PITI + HOA dues. So unless you think you may want to move back to this specific house or have some other reason to hold on to it, I'd probably sell.

Drifterrider

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #5 on: December 22, 2015, 06:45:37 AM »
What town?  What is the median income there?  What is the median rent?

A quality realtor can tell you the current selling price for your house.  Not the "list price", the "Sold" price.

Contact a local property management firm and find out if you are "under renting".  My mother was doing this for years because she thought she "knew what people would pay".  She has zero FI-Q.  When she finally did consent to contact a management firm (after I badgered her relentlessly) she found she was $300 below mark for EACH HOUSE.


StarBright

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #6 on: December 22, 2015, 11:12:06 AM »
- We are definitely currently under renting. The property management companies that I've spoken with have all said they can get 1200-1400 a month for the house - which just seemed high. I estimated 1k to 1.2k a month because that seems more likely :)

-Tbill - nope, located in a little town right outside of Chapel Hill and Durham. It was going to be our forever house (awesome small town, walking trails, farmers markets, great community, proximity to CH and Durham) and then we decided that my husband would try being an academic (his own way of FIRING I guess) so it seems we will now be transient for the foreseeable future until he lands the elusive tenure track job.

-The reason we would hold onto it is that my husband is currently in the land of year to year contracts. I work remotely and can work from anywhere. If my husband's career doesn't pan out we would have somewhere to move back to. Not a super compelling reason

-Drifterrider: Median income: approx 50k, Median rent: 890 (according to city-data - though I can't tell what size dwelling this is for)

- Most people (family, close friends, etc) keep telling us we need to keep the house because rental property, etc. We'll never get a mortgage rate that low again, blah blah but it honestly does feel like a hassle to me.

Thanks for your thoughts all.

OutOfStater

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #7 on: January 06, 2016, 03:32:55 PM »
my wife and I own an out of state rental property. i can't tell you how much of a nightmare it is being an out of state landlord. our situation is similar to yours in that I got a great job so we picked up and left with the house rented out to family and friends. family and friends left and our last year of renting using a property management firm was horrible. We are looking into selling it now, but realtors are telling us we can't get more than about $30k under our mortgage balance.

It looks like you can pay off the mortgage and still have a little bit of cash in your pocket after the sale. I'd sell in a heartbeat if i was in that situation.

StarBright

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Re: Case Study: Sell or Rent in up-and-coming NC town
« Reply #8 on: January 07, 2016, 05:36:39 PM »
Thanks Out of Stater - we ultimately came to that conclusion as well. We signed a contract with a real estate agent today and they will also be organizing basic updates/clean up to the house. We likely won't even need to go back for the sale.