Author Topic: Should I sell my house and rent?  (Read 1695 times)

JPWI

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Should I sell my house and rent?
« on: February 21, 2014, 08:16:59 AM »
Hey fellow Mustachians....

I'm hoping for a bit of advice. 

I have been debating for a few years whether or not I should keep or sell my house and rent.... 

Here's the background info:

My house is currently valued around $250,000.
I owe about $100,000 on it with about 12 years left on a 3.5% mortgage.

The real-estate in our area has not moved in quite some time as far as prices are concerned.  Considering this, I could (try to) sell it, invest the money, and even at 5%, I'd bring in $7500/year on the investment.

I could probably rent a house (that won't be nearly as nice, but can live with) for about $800/month in my area (plus utilities).

A few other considerations:
-  we live in a cold area.  A few years ago, we converted to wood heat, so our heat expenses are minimal right now.  Those are sure to increase greatly in a rental.  (we've also replaced windows, doors, and insulated walls and attic)
-  we have aspirations of moving to a mountainous area, so not having a house would make us more mobile to an opportunity (but I have a good job with good salary allowing us to save a lot toward early retirement right now)
-  we do not live in an area where we'd benefit from renting our current house.
-  taxes are currently about $3,600/year
-  mortgage interest is about $3,600/year

Looking forward to hearing your thoughts.





soccerluvof4

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Re: Should I sell my house and rent?
« Reply #1 on: February 21, 2014, 08:27:17 AM »
I'd stay till your ready to move to that house you want to buy in the mountains as long as the house meets all the MM ways. I.E. close to work etc...

KingCoin

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Re: Should I sell my house and rent?
« Reply #2 on: February 21, 2014, 09:52:50 AM »
This is really two separate questions.
1) Should you sell your house?
2) Should you downsize?

Downsizing will certainly save you money. With $150k, you can buy an investment property that easily covers your $800 in rent with some left over for utilities.

The rent vs buy question is a little more complicated. What would it cost you to buy the $800/mo rental property?

JPWI

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Re: Should I sell my house and rent?
« Reply #3 on: February 21, 2014, 10:09:58 AM »
Quote
The rent vs buy question is a little more complicated. What would it cost you to buy the $800/mo rental property?

This is a great question and one we have wrestled with many times.  We have waterfront property that we enjoy but could certainly live without.  To buy the $800/month rental property, we could easily buy a decent enough place for $100,000.  The struggle is that the market is really a buyers market here, and the lack of water would make it very tough to sell if/when we made the move to mountains.  It'd be possible to rent the place out then, but we'd be living several states away, so the landlording expenses would be much higher.

We do nicely right now in meeting many of MMM's requirements with location as well. I am able to tele-commute most days and get paid mileage for the most of the days that I need to travel.  My wife works 2 miles from home and schools are 2 miles from home for the kiddos.  I expect we'd be able to keep a good location via a different house.