Hi All,
Thank you in advance for your thoughts & advice.
I got married 18 months ago, we bought a new house locally and moved in together. We kept both old houses as rentals. His is rented, cash flow positive, and currently stress-free. Mine was rented, is now vacant and I'm struggling to decide sell v. rent. We don't enjoy landlording, but are willing to do it if we can come out significantly ahead of cashing out and investing the $$. We would probably walk away with about $200k after fees from the sale. If we invest that today and it doubles in 10 years, it seems that the 4% withdrawal rule would allow us a similar income to what the rent would produce once the house is paid off in 9 years.
Should we:
1. Rent the house for 1 year and sell before cap gains benefit expires (7/2016), gaining $400/mo cash flow + ~8260 in principal reduction ($13k profit before expenses)
2. Rent the house indefinitely, producing income of $1200-1400 (rent - tax/ins) after it's paid off in 9 years
3. Sell now, pocket ~$200k and invest, anticipating 7-8% return
I'm leaning toward selling, but don't want to leave money on the table. Would love to get some help with the math and the decision!
Market Value: $320k
Original Purchase price: $172k
Original Mortgage Amount: $137k
Interest Rate: 4.5%
Mortgage Term: 15 year fixed
Term remaining: 9 years, 1 month
Amount remaining on mortgage: $85,542
Expected Rent: $1650-1750/mo
Mortgage payment - Principal and Interest: $1009/mo
Taxes and Insurance: 333/mo
HOA costs: 0
Deferred maintenance notes: Very small 1942 cottage, good condition, has septic tank and slightly finicky plumbing (occasional slow drains, etc). I worry about a renter flushing baby wipes or something and ruining the septic. My neighbor next door had a tenant do that and had to hook up to sewer for $30k. That risk makes me nervous!
Thanks for your thoughts & ideas!!