I’m about 18 months from retirement so I’m starting to think about what I want to do with my condo, as there are some repairs and other things I need to do to prepare for sale or rental – and whether I sell or rent might impact the timing of repairs for tax purposes. I plan on traveling & living abroad for awhile in my early retirement. Also, selling it would mean I put it on the market in less than 15 months.
Facts about the unit:
* Bought for $550K, probably could sell for $360K (before agent costs & taxes) OUCH
* Paid off (no mortgage)
* Have $5K-10K in repairs/upgrades that need to be made before selling/renting
* About the building condition & HOA: HOA has $275,000 in reserves on 20 units. New roof & gutters in 2013. But there are a number of things that need repair – new pavement, painting, possibly new siding or repairs, there is evidence of mold in a couple units but the cost/scope of this hasn’t been bad (yet). Management isn’t great.
* Taxes + HOA fees are about $600 per month.
Current rents are around $2000 per month. Since I’ll be abroad I’ll need to have management and the going rate for that is one month rent to find tenants or renew a lease plus 10% per month to collect rent and be “on call” for maintenance issues. Maintenance, dues, assessments, landlord insurance, and taxes would be on top of that - so I'm guessing the net would only be around $1000 per month. Vacancies are fairly low if you price it right.
Reasons to sell:
* ratio of rent to sales price is not great (I understand from this forum that around 1% is ideal and this is about half of that)
* free up money for other stuff
* risk of special assessment
* less worry
* easier tax filing
Reasons to rent:
* unit has a storage unit that I could use for free while traveling
* unit is in a state with no income tax so I’d like to keep the address
* fairly high probability that I might want to come back and live in this area for a few years (maybe after age 50 – the city has lots of activities for 50+). It’s next to a nice lake for kayaking and city is very bike-able and walkable. Hikes are less than 1 hour away. The views & sunsets are amazing.
* no capital gains on the appreciation for quite some time as it is so far under what I paid for it (but I understand I might have to live in it for a few years to get this benefit)
* appreciation could be fairly high as it’s one of the fastest growing populations in the country (Seattle area). Condo development has kept the appreciation fairly low since the crash but there is limited room for more developments in the particular 4 mile radius.
* I have enough in non-retirement savings to live off of, coupled with rental income, that I won't need to access the $ in the home value for many years.