Seeking some advice:
My husband and I are moving from Anchorage, Alaska to Colorado at the end of this summer. We bought a house here in Anchorage approximately 2 years ago. We would not have bought it if we had know that we would be moving out of state after only 2 years, but life’s plans changed. We are considering whether we should rent or sell.
If we rented, we would have to find a property manager because we would not be able to manage the house from such a far distance. If we had a robust group of friends and family in Anchorage who could help us and make recommendations for handymen, etc., maybe we could have, but that’s not the case. We’ve been here only 4 years and we do not have that type of network, so managing the rental ourselves is just not an option. We have been interviewing management companies here. The best-valued company we have found charges a lease-up fee of $600 or ½ month’s rent, whichever is greater, and 8% of the rent collected. We are obviously responsible for all repair costs as well.
We purchased the house in April 2016 at 208,500. We did not put anything down. We have two mortgages on the property because at the time we bought we qualified for a program that would make us a second loan for 20% for the purpose of avoiding mortgage insurance.
First mortgage has a current balance of $160,692.76 at 4.00%. Monthly payments are $1,069.92, but gets readjusted on occasion for escrow if taxes or insurance costs change.
Principal: $274.43
Interest: $486.26
Escrow: $309.23
Second mortgage has a current balance of $40,330.91 at 3.75%. Monthly payments are $199.08.
Principal: $64.43
Interest: $134.65
Together, monthly mortgage payments are $1,269 with $338.86 currently going to principal and $620.91 currently going to interest.
Total still owed: $201,023.67
Both are 30 year mortgages with 28 years remaining.
Per Zillow, the property is worth approximately $234,000, for whatever that’s worth. We have not spoken to any realtors yet to get comps.
The property management companies have estimated that we can rent the property for approximately $1,500 (we are still waiting on some comp analysis to come in). Thus, assuming we can rent for $1,500, once you subtract the monthly management and lease-up fees, and mortgages, we are left with about $50. We plan we would set aside all the proceeds for maintenance.
We are definitely not getting into the rental business in order to create a passive cash flow and the math on that just doesn’t work right now; the purpose is basically to wait out the market here. The selling market here has been flat since we bought; which is better than what people thought would happen as there were predictions of a fall off. There are signs of improvement lately. Although Alaska has been in a mild depression for a few years now, there are large state projects on the horizon (a large natural gas pipeline deal with China, oil drilling in ANWR) that give us hope that the market will come back and maybe even boom. Although, we do not know how long we might have to wait to see the economic come back up here. Nonetheless, we would kick ourselves if we missed out on taking advantage of a big boom that drastically increased the value of our property.
We know that we obviously do not have much equity if we were to sell right now, and that most if not all of it will be eaten up by commissions, closing costs, etc. We just put on a new roof and installed all new windows, so that’s more money we have sunk in to the property.
We need some advice, including tax advice about what will happen if we sell now or sell later. I am leaning towards renting the house and keeping an eye on the market for a good time to sell to try to get a bit of a return on our overall investment. My husband is leaning towards selling the house now and cut our losses so that we are just done with it and don’t have to deal with rental management, continued maintenance, the risks of vacancy, etc. We have not been able to totally convince the other why one option is overall better than the other.
If we want to sell, we basically need to list the house now or soon to take advantage of the summer selling season. I am also concerned about the risk of trying to sell and the house sitting empty for a long time without an income stream to cover the mortgage.
I can answer more questions or provide more information if needed. Thanks in advance!!!