Rent or sell? House sale fell through.

[Norrie]

Hi, gang.

We have a four bedroom, two bath house that we're currently trying to sell by owner. We were supposed to close last Friday, but the deal fell through at the 11th hour. We literally went and completed our side of the paperwork - that's how close to closing we were. Anyway, it's a great house. We fixed it up completely and it's move in ready. This latest closing mess made us wonder if it's maybe smarter to just rent the damn thing out instead of selling it.

Of note: we bought a new house last year by taking out a bridge loan. The bridge loan has a $98,000 balance that would be paid off once we theoretically sold the old house.
We're considering taking out a new mortgage at a good interest rate to cover the 36K of the old mortgage and pay off the 98K of the bridge loan, then renting out the house. So we'd have to take out about $134,000, and we'd have about $41,000 in equity.
We're also idiots, and sank way, way too much money into this house (landscaping, really nice windows, fixing up the bathrooms, etc.). Not sure if that matters, but that accounts for some of the difference between original purchase price and current appraised value.

I think that's it, but please ask if I've forgotten anything. Thanks so much for taking a peek!

Market Value: $175,000 (just appraised)
Original Purchase price: $120,000
Original Mortgage Amount: $95,920
Interest Rate: 7.2% (long story)
Mortgage Term: 30 years
Term remaining: 21 years (not really though, less than 36K left on mortgage)
Amount remaining on mortgage: $35,900
Gross Rents: it looks like similar properties are going for $1,650/mo.  I would say that we can safely ask for at least $1,500/mo.
Principal and Interest:  $742.21
Taxes and Insurance: $310.75
HOA costs: $50/year
Deferred maintenance notes: air conditioning is on shaky legs, but we have a friend who can give us a decent hook up, both with repair and replacement. Hot water tank is old, but still holding tough.
Anything else special or unique in regards to the numbers of the property: not that I can think of.

[GizmoTX]

My MIL's house sale didn't happen with the first contract. The second one closed. Unless you are desperate for cash flow, why don't you put it back on the market? Hopefully you got to keep the escrow money.

[JasonK]

Well, it sounds like you would prefer to sell the property.  It also sounds like it's rehabbed in excess of 'rental property grade', and the numbers look OK (not great, but OK) as far as a return (estimated rent less than 1% of value).  I'd say re-list it and sell it.  Take advantage of this good market. 

If you want to be a landlord and get into rent houses I think you could find better deals (especially fixer uppers / foreclosures) where your return would be better, and you could rehab with tenants in mind. 

[Norrie]

Thanks so much, Gizmo and JasonK.

The house has been listed all along, but we stopped doing open houses and really pushing it once we had a contract. Back to open houses this weekend. My preference is definitely to sell it, and I think that it will eventually sell. It just occurred to me (probably because I was trying to see a silver lining yesterday when the deal fell apart) that maybe it would make sense to hold on to it from a numbers perspective.

At least I'm not so demoralized that I want to just give the stupid house away. Not quite, at least.

Thanks again for the input!