Hello MMM community. Having just read MMM's latest blog post about rent vs buy I thought I'd query the community for some additional options brainstorms. I bought a condo in San Francisco in 2012. It's been working out nicely because even though housing prices are ridiculous, rental prices have continued to get even more extreme. I get to bike to work and quite enjoy my neighborhood. For a condo it has a lot of privacy and charm too, being in a 2-unit building (a converted 1910 Victorian that's in pretty good shape inside and out). Overhead is low because I'm the HOA president and keep the expenses to a level that are even lower per unit than equivalent expenses on a single family home.
That all said, having only discovered MMM recently and realizing that FIRE is my goal, I do have the slight dilemma of that I won't be able to maintain my 30-year 4% mortgage unless I work for another 10-ish years (I'm 36 and I have a moderately enjoyable office job that I don't mind milking for as long as I can, but there's no way I can see myself in any 40-hr office job for 10 years). Only an hour and a half north is beautiful Sonoma County where housing costs in places can be 50% less than SF! By my math, I could foreseeably 'retire' in 3 years if I either sell or if I rent out the condo.
Although SF is a tenant-favoring town to almost an extreme and I've never been enthusiastic with the prospect of being a landlord, it would seem a shame to have to sell so soon given how nice of a unit and neighborhood it's in (i.e. stable/conservative investment which is nice given that after 'retiring' I wouldn't keep more than 50% of investments in equities.). One other long term perk favoring ownership in California is 'Prop 13' which locks in property taxes to the original purchase price, only going up with T-bills (~2% a year)
So, I figure that unless I decide to move out of state or out of the country to get even more 'extreme' on low cost (something I'm still drawn to), leasing it out is a good option because I can hold on to the investment and get a moderate net cash flow (especially if rents keep skyrocketing in SF due to the tech boom) and continue to benefit from leveraging a low-interest loan for appreciation on the whole unit.
One obvious downside though is missing out on the $250k cap-gains exemption for owner-occupied property sales so I'd probably have to know that I'm in it for the long haul and committed to staying in the Bay Area (don't get me wrong, I love it here, but housing costs are nuts almost everywhere and I'm not tied down by any family, kids, etc.).
The biggest uncertainty variable is that I'm still single and that having a partner in this equation could dramatically shift the parameters, but I feel I owe it to myself to just assume that I'll remain single so that I don't pick a partner for the wrong reasons.
Thanks for your thoughts!