Author Topic: Sell or rent?  (Read 2110 times)

Carpe Dime

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  • Location: Boulder, CO
Sell or rent?
« on: July 18, 2014, 10:27:10 AM »
Market Value: $412k (zillow estimate, appraised at time of refi in March 2013 for $400k)
Original Purchase price: $360k (in 2004)
Original Mortgage Amount: $328k  (in 2004)
    NOTE: The house has been re-financed twice since orig. purchase and some equity taken out.  Current mortgage is $340k
Interest Rate: 3.5%
Mortgage Term: 30 year
Term remaining: 28y, 8m
Amount remaining on mortgage: $332,500
Gross Rents: expect it could easily rent for $2.2k/m, but would try for $2.5k/m (there are few rentals in this neighborhood, but it is very conveniently located)
Principal and Interest: $1,532
Taxes and Insurance: $480 (inludes PMI)
HOA costs: $0
Deferred maintenance notes:
It will need a new roof in 1-3 years, no other regular maintenance expected in the short term


Thanks in advance for any advice!

waltworks

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Re: Sell or rent?
« Reply #1 on: July 18, 2014, 10:39:55 AM »
Terrible 1% rule fail, sell it. The PMI and new roof are icing on the cake of money-losing horror.

-W

Carpe Dime

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  • Location: Boulder, CO
Re: Sell or rent?
« Reply #2 on: July 18, 2014, 11:15:03 AM »
Terrible 1% rule fail, sell it. The PMI and new roof are icing on the cake of money-losing horror.

-W

Thanks. I was confused about 1% rule: Which number are you applying the 1% to: the loan amount? market value? something else? Although 1% of even the lowest number above points to a 3.2k rental. I may be wrong, but I doubt I could rent it so high. We have a couple meetings with local agents lined up. Hopefully they'll be able to give us a better sense of the rental market.

One thing that may have an effect on the decision is an impending move across the country at the end of October. We don't anticipate having it on the market until mid-August, leaving a fairly narrow window to close the deal. We're located in a good market, and we don't anticipate not selling it but if we can't get it done before we move, the cost of carrying the mortgage is making me wonder if renting for 6 mo - 1 year would make sense. Also, a buyer may insist on some compensation for the roof replacement, so we may have to account for that regardless of selling or renting.

Thanks again.

waltworks

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Re: Sell or rent?
« Reply #3 on: July 18, 2014, 12:29:47 PM »
Use market value for the 1% rule. So you would need to be getting ~$4k/mo to make it worthwhile.

An extra month or two of carrying the mortgage while selling the house is not a big deal in the larger context - you should sell. Period.

-W

escolegrove

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Re: Sell or rent?
« Reply #4 on: July 21, 2014, 11:01:42 PM »
Our business model is a little different. My husband is active duty so we move a lot. We buy houses that have equity through sweat equity or brain equity through short sales/foreclosures or both. We buy personals and than rent them out when we leave the more equity they have is awesome but we keep them for the long term cash flow. It really depends what you goal is long term. We have never had 1%, 2%  or 50% properties and have done very well.

waltworks

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Re: Sell or rent?
« Reply #5 on: July 22, 2014, 12:10:23 AM »
Sounds like you should sell your house to Escolegrove...

-W