I'd just crunch the numbers. It won't take more than 10 minutes. I attached a nifty spreadsheet for you a little further up.
If you're not getting a good cash on cash return, sell it. Also, consider doing FSBO and saving $ there.
I checked out the spread sheet. I guess what I'm asking is for others to help me crunch the numbers. I'm a real estate noob, so I'm not sure which numbers I should be focusing on, and how to compare that with the option of selling it. Or if any of my assumptions with the numbers are realistic.
EDIT: I've edited my original post to include a sell/rent case study from ARS's sticky.
The best way to do it quickly is to fill out all the items on the spreadsheet, then take a look at the cash-on-cash return. The market is currently giving us around an 8% return. Anything lower than that, and it'd probably be worth selling. Especially if you don't want to do property management.
I filled it out and it seems negative.
Here is what I put in:
Purchase Price $150,000.00
Down Payment % 56%
Down Payment Amount $84,000.00
Interest Rate 6.000%
Loan amount $66,000.00
Life Loan (years) 30
Payments Per Year 12
Total # of Payments 360
Full Rent Amount $1,100.00
Yearly Property Taxes $3,000.00
Expected Vacancy % 8.3%
Management Fees (% of Rent) 10%
This assumed I refi right now, and take $30k cash to fix the place up. That should give me a mortgage of approximately $66k for 30 years. I don't think I can get much more than $1,100 or $1,200 for rent. Some places in the area are renting up to $1,500, but I don't know if I can pull those rents with this place, or if anyone could get those rates. I suspect those listings renting for $1,500+ are not comparable to this place. It looks like a moot point as the rent needs to creep up to $1,900/mo to make the cash on cash return equal 8%, which should be about the break even point for making renting a financially viable option? I don't want to just match the market returns though if I have to deal with the headache of a rental, so ideally I'd need even higher rent than that to make it worth my while.
This sounds like a real stinker of a rental property, but a fantastic deal for me to sell it and be done with it. That was my initial gut reaction, and after looking at the numbers I'm leaning even more towards selling instead of renting. Is there anything I am missing or not considering?