Author Topic: Potentially looking to start renting out my house next year  (Read 2916 times)

afictor

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Potentially looking to start renting out my house next year
« on: August 06, 2013, 12:40:07 PM »
I currently own a home in Baltimore but am planning to move in with my girlfriend in DC sometime next year. My house is in a very popular neighborhood, probably one of the nicest in the city for young professionals, and from my understanding I could probably command a rent that is higher than my mortgage and make some money off of it. On top of this, I have done lots of work to the house since buying it:

1. Built a roof-top deck with views of the skyline and harbor.
2. Added a master suite including a second bathroom and walk-in closet (the area where the bathroom/walk-in closet are was formerly an awkward room between the two bedrooms that didn't serve much of a purpose).
3. Renovated the original bathroom which was dated and done poorly overall, completely re-built including custom tile work, new plumbing, etc (it came out great!).

I did all of these things more because I wanted to for myself, and not really with the idea I would one day be renting my house, but I think these are big things that will help command a higher rent.  I'm completely new to the notion of renting my house, and am still trying to come to terms with the emotional attachment I have to the house (I love everything I've done with it and love living there).

Are there any tips anyone is willing to share with a newbie like me? Should I go through a property manager to take care of the day-to-day stuff? Should I be prepared for my house to be damaged by renters?

ender

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Re: Potentially looking to start renting out my house next year
« Reply #1 on: August 06, 2013, 12:42:58 PM »
Just because your rent payment is higher than your mortgage does not mean you are actually making money by renting.

afictor

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Re: Potentially looking to start renting out my house next year
« Reply #2 on: August 06, 2013, 12:48:40 PM »
Just because your rent payment is higher than your mortgage does not mean you are actually making money by renting.

I understand that, and my short-term goal isn't to make money but it would be a huge plus obviously. My goal is to not sell the house and eventually own it outright so I CAN make money off of it. The neighborhood is a hot bed and only trending upwards, I think this is a valuable property that I would be a fool to put on the market.
« Last Edit: August 06, 2013, 12:50:44 PM by MP18 »

ArtieStrongestInTheWorld

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Re: Potentially looking to start renting out my house next year
« Reply #3 on: August 06, 2013, 01:21:55 PM »
Do you mind me asking where in Baltimore your house is?  I'm in DC and am also interested in Baltimore as a potential rental market.

Whether to use a property manager obviously depends on a lot of different factors, but I think a big one to consider is where in DC you'll be living.  Coming from, say, Alexandria could easily add an hour or more of drive time than coming from somewhere like Silver Spring.

Johnny Aloha

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Re: Potentially looking to start renting out my house next year
« Reply #4 on: August 06, 2013, 05:56:49 PM »
What are the numbers? 

Your purchase price, rent estimate, taxes, insurance, etc should all be shown before anyone can make a recommendation.

afictor

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Re: Potentially looking to start renting out my house next year
« Reply #5 on: August 07, 2013, 05:51:28 AM »
What are the numbers? 

Your purchase price, rent estimate, taxes, insurance, etc should all be shown before anyone can make a recommendation.

Good point. Here are the numbers.

Purchase Price: $265k
Mortgage: $247k left @ 4.5% (conventional; recently started paying down about $300/month extra towards principal)
Insurace: $1k per year
Taxes: (gulp) $5k per year

A mortgage payment breakdown on an average month with no extra principle payment breaks down like this:
$350 towards principal
$950 towards interest
$520 towards escrow (insurance and taxes)
Total monthly payment with no extra towards principal: $1,820

Rent Estimate: $2,000-$2,300/month ballpark. I did some research and that's the range for rentals in the surrounding area, in similar houses (2 BR, 2 BA). I think I can command the high end of that given the work that I have done to the house and the specific location in the area.

One other note: I refinanced into my current loan in the fall of 2011 (I was in a 10 year interest-only loan and wanted to be conventional), and at that time the house appraised for $285k. This was prior to renovating the original bathroom, so that should come up a bit. Also, the housing market has started coming up since then, so I'd estimate that I could consider the home value to be closer to $300k now.
« Last Edit: August 07, 2013, 05:59:32 AM by MP18 »

afictor

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Re: Potentially looking to start renting out my house next year
« Reply #6 on: August 07, 2013, 10:04:01 AM »
Do you mind me asking where in Baltimore your house is?  I'm in DC and am also interested in Baltimore as a potential rental market.

My house is in the Riverside neighborhood, which is between Locust Point and Federal Hill. Most people refer to the area as Federal Hill anyways. The neighborhood is great due to its proximity to lots of great things in the city - the harbor, short water taxi ride from Fells Point, walking distance from the stadiums, etc.

In terms of convenience, I-95 is about a 2 minute drive away from my house so getting into/out of the neighborhood is a breeze. There are multiple bars/restaurants within walking distance, and two grocery stores are each within a 10 minute walk.
« Last Edit: August 07, 2013, 10:09:12 AM by MP18 »