I have owned my home since May of 2008, and am moving to another city in the first quarter of 2014.
To give some context for the situation: I bought the house for $265k, and I owe $246k, with a 4.5% interest rate. My monthly mortgage payment is $1,820.
I was planning to rent the house out, since I am a bit emotionally attached to it and did not want to sell. However, the more I think about it realistically the more I realize renting will probably not be in my best interests. I will likely be breaking even or hovering just above the break even point, and obviously there would be all the added overhead that comes with renting a property. I do not want to pay for a property manager, I have heard they don't add much value and given that I would be breaking even I can not justify the cost.
I talked to a listing agent this week to see what he thinks the market is like and what I could list the house for. He thinks I can list the house in the 260-280k range. It looks like I would be netting about $10 grand in cash if I sell the house for $280k. This is after subtracting all the broker fees and settlement costs. I was slightly disappointed with this assessment. I suppose I had over-valued my home and thought I could list for around $300k.
Now I should mention that I have sunk about $35k into renovations including a roof deck, two new bathrooms and a master suite with a walk-in closet. I paid for all of that in cash and have no outstanding debt for any of the work that was done. Maybe I am foolish but I thought I would be able to recover that cost, with the market having appreciated a bit and with buying for $265k. The neighborhood is a very attractive place to live and is regarded as one of the best areas in the city.
Now I find myself struggling with what to do. Should I sell and cut my losses on the money I sunk into the house? It would be rough to swallow but also a great lesson learned. Is renting really such an awful idea? I still owe about $30k on the principle before I qualify to get PMI removed. I suppose one drastic option would be to cover that in cash now, remove the PMI & refinance to get down to a better interest rate/lower payment, then rent for a surplus.
Any advice would be appreciated.