All,
Hoping you can help give some third party perspective here. My wife and I are considering moving within the same metro area. We are trying to decide whether it makes sense to sell our current house or rent it out.
Details:
Market Value: approximately $315k (1 of 8 properties of same age and size, one of these was sold for $309k last September and we are in a part of Houston where real estate is still doing well)
Purchase Price: $245k 2.5 years ago, so it has appreciated a lot in 30 months
Remaining mortgage: $182k (we put down 20% and then paid extra for awhile)
Mortgage Term: 30 year, 3.75% fixed conventional loan, so 27.5 years left
P&I: 900/month
Taxes and Insurance: 700/month (required flood insurance as we're in a 100 year flood plain. also high property taxes and Texas home insurance rates)
Rental Value: My estimate is between $2500 and $2800 per month based on a cursory search. Some friends recently moved out of one of the similar homes that they were renting, so need to find out from them what they paid for comparison.
Hopefully you can see from above that we would clear $100k or so by selling even after realtor fees and any expenses to prep for sale. We think we can scrape together the cash for the down payment without having to depend on the proceeds from this house, which is why we are considering renting.
We also expect to see moderate increases in the market value of the home the next few years as we are in a safe and desirable location with a very reasonable commute.
My questions:
1. Does it make sense to rent it out from a return on capital standpoint if we use a property management company that eats 8-10% of the rent? We are unlikely to choose to be property managers ourselves, so this is very relevant. I know right off the bat it doesn't quite meet the 1% rule of thumb for rentals.
2. At what rent price do you think it would make sense, if any?
