Author Topic: Should we rent or sell our house?  (Read 3053 times)

FrozenAssets

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Should we rent or sell our house?
« on: December 14, 2015, 10:39:18 AM »
Current SFH in the city:
Market Value:  357,5K
Original Purchase price: 259K
Original Mortgage Amount: 237K
Interest Rate: 3.75%
Mortgage Term: 30y
Term remaining: 29y
Amount remaining on mortgage: 232K
Gross Rents: $2400
Principal and Interest (the P&I of your PITI - should match with the above info): 1088
Taxes and Insurance (the T&I of your PITI): 395
HOA costs: n/a
Deferred maintenance notes: n/a
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.): nope

Current 4/2 2300 sq.ft. home was built in 1986.  We've lived in it for 10 years, and have put in a new furnace & water heater a few years ago, new windows this year, it's freshly painted with mostly newer appliances and in a great location between the military bases and hospital system, right on the trail system, quiet culdesac...  Expected rent would be $2350-2550. 


We are under contract to owner occupy a 2011 duplex on an acre in the country 45 miles from our current home:

Market Value:  380k
Original Purchase price: 360K
Original Mortgage Amount: 304K
Interest Rate: 4.1%
Mortgage Term: 30y
Term remaining: 30y
Amount remaining on mortgage: 304K
Gross Rents: $1500 (the side we will occupy was grossing $1700)
Principal and Interest (the P&I of your PITI - should match with the above info): ~1400
Taxes and Insurance (the T&I of your PITI): ~500
HOA costs: n/a
Deferred maintenance notes: n/a
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.): no

We bought the duplex for a couple of reasons; primarily a desire to live in a more rural and less populated area, and to get into a duplex at a much lower cost than in the city.  New or near new duplexes here are $485K+ in not-great areas of town, and even old and rundown properties where we'd be nervous letting our children play freely are demanding $300K++  The original plan was to rent our current home for 1 year and then reassess, and move back into our city home if we change our mind about the country duplex.

Income on the house should cover our portion of the mortgage on the duplex and then some.  So we could potentially hold the house for a year and then sell...
But we wonder if we should just sell now, considering that the house is in excellent condition and we could simply hold our proceeds for a year instead, buy another property in the city should we change our mind about country life, or reinvest into another multifamily in the country... The longterm plan (barring us discovering that we don't like country life after all) is to purchase two more similar newer duplexes in the next 5 years, followed shortly by a single family home for ourselves. We will manage properties ourselves.  We owned a fourplex and duplex before we bought the house, my husband is very handy and I don't mind doing the administrative work.

Any insight? 

FrozenAssets

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Re: Should we rent or sell our house?
« Reply #1 on: December 15, 2015, 10:41:37 AM »
No opinions?  We are leaning strongly toward renting for a year.  It pencils out better, barring any unforeseen expenses or circumstances, to rent the SFH for 12-18 months and then sell, putting the proceeds toward another duplex then...

ShoulderThingThatGoesUp

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Re: Should we rent or sell our house?
« Reply #2 on: December 15, 2015, 10:46:16 AM »
Have Alaska prices been affected by low oil prices? If not, there's some logic in getting out while the getting's good...

robartsd

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Re: Should we rent or sell our house?
« Reply #3 on: December 15, 2015, 12:09:44 PM »
With any question about moving back within a relatively short time frame, I'd say hold and rent (except the concerns about oil's impact on property values). The cost involved with deciding not to stay in the rural location in a year is two extra real estate transactions - that's quite a bit of time an money.

jnc

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Re: Should we rent or sell our house?
« Reply #4 on: December 16, 2015, 05:43:33 AM »
The house is not a terrible investment. So unless you are worried about house values plummeting, it would not hurt to rent it out for a year and see how that works for you.

zephyr911

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Re: Should we rent or sell our house?
« Reply #5 on: December 16, 2015, 11:26:55 AM »
If you're confident the home will retain its value, there's minimal risk in holding it. Gross rent over 2x debt service is good, and allows for some surprises. Others rightly point out that the transactional costs associated with reversing your decision could be substantial.

For the sake of context:
What's your employment situation?
Does moving 45 miles away induce any other issues? Commute, proximity to services, etc? Anything that could prove an unexpected challenge?

FrozenAssets

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Re: Should we rent or sell our house?
« Reply #6 on: December 17, 2015, 05:19:58 PM »
Have Alaska prices been affected by low oil prices? If not, there's some logic in getting out while the getting's good...

No.  We also didn't feel the affects of the 2006 crash up here...?

With any question about moving back within a relatively short time frame, I'd say hold and rent (except the concerns about oil's impact on property values). The cost involved with deciding not to stay in the rural location in a year is two extra real estate transactions - that's quite a bit of time an money.

Costs of transactions are a definite concern, especially since we plan to buy at least two more investment properties if all goes well with our rural-living plan.

With any question about moving back within a relatively short time frame, I'd say hold and rent (except the concerns about oil's impact on property values). The cost involved with deciding not to stay in the rural location in a year is two extra real estate transactions - that's quite a bit of time an money.

Thanks!

The house is not a terrible investment. So unless you are worried about house values plummeting, it would not hurt to rent it out for a year and see how that works for you.

That's the plan, thanks!

If you're confident the home will retain its value, there's minimal risk in holding it. Gross rent over 2x debt service is good, and allows for some surprises. Others rightly point out that the transactional costs associated with reversing your decision could be substantial.

For the sake of context:
What's your employment situation?
Does moving 45 miles away induce any other issues? Commute, proximity to services, etc? Anything that could prove an unexpected challenge?


I am a SAHM.  Moving does induce a very un-mustachian (but beautiful!) 45 mile commute for my husband.  We will need a vehicle more suited to commuting.  This is the one big downfall in our plan.  :/ Our current home is 2 miles from his workplace; a hospital system which also happens to be one of the largest employers in the state.  It's about 4 miles the other direction from the military base.  We don't foresee any trouble renting it and keeping it rented.  The rural home is within a few miles of regular "city" services (city population is under 10K) but serves a much larger surrounding population.

adamcollin

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Re: Should we rent or sell our house?
« Reply #7 on: December 18, 2015, 02:09:18 AM »
You should sell the property if you feel that the real estate market is at its peak and you are getting the right price.

Bearded Man

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Re: Should we rent or sell our house?
« Reply #8 on: December 29, 2015, 04:26:23 PM »
That's some hefty cash flow, not even counting principle pay down. I'd say unless you know with near certainty that oil prices won't affect Alaska RE like they did in the 80's, I'd keep it.