Author Topic: I think I'm selling but would it make sense to rent it out instead?  (Read 1697 times)

ZiziPB

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I'm about to list my condo for sale but I figured that I should check if renting it out instead would make more sense. 

Here are the details:

Market Value: $235-$240K
Original Purchase price: $285K
Original Mortgage Amount: $225K
Interest Rate: 3%
Mortgage Term: 15 years
Term remaining: 10.5 years
Amount remaining on mortgage: $171K
Gross Rents: $2500 per month
Principal and Interest (the P&I of your PITI - should match with the above info): $1554
Taxes and Insurance (the T&I of your PITI): $781
HOA costs: $315 per month
Deferred maintenance notes: No deferred maintenance

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.): No additional costs

If I decided to rent I would probably refinance to a 30 year loan to make it a cashflowing rental.  My FIRE plan takes me abroad so I would be a remote landlord in the truest sense of the word.

Thank you in advance for any feedback.

Drifterrider

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #1 on: August 17, 2017, 09:53:40 AM »
How much does it cost you each month to own?
How much can you realistically get in rent?
How much cash flow is there?
Is it worth your time and aggravation?

Start with these answers.

Will you actively manage or hire someone?  Will you live near or far? 

Based on your information and the values you supplied, renting for $2,500 per month will cost you $150 per month.

You can start adding numbers such as tax deductions and depreciation in order to make the numbers look better but, I would stop right at "there is no cash flow". 

Now, IF your condo is a beach front unit or a mountain unit with a view that you want to have as a future retirement home, you might consider holding it but as a strictly money making venture, I wouldn't.

ZiziPB

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #2 on: August 17, 2017, 10:03:44 AM »
How much does it cost you each month to own?
How much can you realistically get in rent?
How much cash flow is there?
Is it worth your time and aggravation?

Start with these answers.

Will you actively manage or hire someone?  Will you live near or far? 

Based on your information and the values you supplied, renting for $2,500 per month will cost you $150 per month.

You can start adding numbers such as tax deductions and depreciation in order to make the numbers look better but, I would stop right at "there is no cash flow". 

Now, IF your condo is a beach front unit or a mountain unit with a view that you want to have as a future retirement home, you might consider holding it but as a strictly money making venture, I wouldn't.

Yup, currently it costs me $2650 (of which $1100 is the principal component) but if I refinanced to a 30 year loan, I think I could reduce it to about $1900.

I think I would need to hire someone to manage it for me.  Don't know what the cost of that would be.

2Birds1Stone

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #3 on: August 17, 2017, 11:15:48 AM »
With your impending move across the world, keeping it would hardly be worth the headache.

tralfamadorian

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #4 on: August 17, 2017, 11:22:06 AM »
Income:
Rent: $2500

Expenses:
PITI: $2335
HOA: $315
Vacancy: $250
Management: $250
Maintenance: $250
CapEx: $125

Net: -$1,025

Very clear case of selling over renting.

Drifterrider

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #5 on: August 17, 2017, 11:32:32 AM »
How much does it cost you each month to own?
How much can you realistically get in rent?
How much cash flow is there?
Is it worth your time and aggravation?

Start with these answers.

Will you actively manage or hire someone?  Will you live near or far? 

Based on your information and the values you supplied, renting for $2,500 per month will cost you $150 per month.

You can start adding numbers such as tax deductions and depreciation in order to make the numbers look better but, I would stop right at "there is no cash flow". 

Now, IF your condo is a beach front unit or a mountain unit with a view that you want to have as a future retirement home, you might consider holding it but as a strictly money making venture, I wouldn't.

Yup, currently it costs me $2650 (of which $1100 is the principal component) but if I refinanced to a 30 year loan, I think I could reduce it to about $1900.

I think I would need to hire someone to manage it for me.  Don't know what the cost of that would be.

I pay 10% of the rent.  My mother pays 8% (she has multiple units).  That seems to be standard rate in the SE.

sequoia

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #6 on: August 17, 2017, 03:55:46 PM »
Sell it. The property is not making $ to worth a headache. Actually it may look like you are losing $.

Another Reader

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #7 on: August 17, 2017, 04:30:45 PM »
Income:
Rent: $2500

Expenses:
PITI: $2335
HOA: $315
Vacancy: $250
Management: $250
Maintenance: $250
CapEx: $125

Net: -$1,025

Very clear case of selling over renting.

+1000.  You did not begin to account for the expenses, and this analysis is much more realistic, especially over time.

ZiziPB

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Re: I think I'm selling but would it make sense to rent it out instead?
« Reply #8 on: August 18, 2017, 07:19:58 AM »
Sounds like a unanimous vote for selling :-)  It will be sold then!