Author Topic: HELP: Will i be able to rent my property  (Read 2308 times)

HappyRobby

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HELP: Will i be able to rent my property
« on: July 17, 2015, 03:52:15 PM »
Good day,

I am requesting a little advice/help regarding a property I own in southern California. Property was estimated around 350,000 when I purchased it from a motivated military family who had moved and needed to dump the property. The home is a 3 bed 2 bath, 1400 sq ft, 2 car garage, 6 car driveway detached home labeled as a "Condo" because of my HOA that is in excellent condition. I have high HOA fees which are really interfering with my math to try and rent the property. I pay 300 a month for my HOA, I was willing to accept this high HOA fee because I am in the military and during periods of my absence I didn't want my family to incur any hardship caring for the property. I am trying to estimate reasonable rent as the property is in mint condition but the math just isn't working. My expenses are as follows:

Mortgage (taxes and insurance included): 1750.28 (I currently have a roommate paying 700 which lowers this to an out of pocket 1050.28)
HOA: 300
Utilities: vary but typically 150-180 (water trash electric internet)


The rents in the area vary widely but aren't close to anything where I could generate a solid monthly cash flow based on those assessments. I am beginning to think it may be wise to plan to sell this property when I am ready to move on. Any advice on potential to make this a cash flowing property would be greatly appreciated!!

Thanks,

Rob

chevelle57

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Re: HELP: Will i be able to rent my property
« Reply #1 on: July 17, 2015, 04:05:50 PM »
Yup HOA fees can kill the profitability of a rental.  Just wait until you get hit with a special assessment for something you could care less about and you will be even further in the red.  Looks like your best option is to sell this property when you move.  Honestly a majority of properties are great to live in but the numbers just don't work in terms of them being good rentals.

HappyRobby

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Re: HELP: Will i be able to rent my property
« Reply #2 on: July 17, 2015, 05:01:01 PM »
Thanks chevelle!!. I think the profitiablity is there on this property in terms of resale. Just not a good rental deal! Cheers!

Nords

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Re: HELP: Will i be able to rent my property
« Reply #3 on: July 18, 2015, 10:15:05 AM »
Thanks chevelle!!. I think the profitiablity is there on this property in terms of resale. Just not a good rental deal! Cheers!
If you bought it at a discount, and it's worth more than you paid for it, then why wait for something bad to happen?  If it won't rent for a profit because of the HOA fees, then why rent it?  Why put up with low (or negative) cash flow when you can avoid the risks?

I'd sell the property just to avoid the downside.  It does not appear to be a good rental property so there's no compelling reason to hold it.

Here's a thorough analysis of the choices:
http://the-military-guide.com/2013/07/01/book-review-rent-vs-own/

And here's the extra issues imposed by being on active duty:
http://the-military-guide.com/2015/01/01/dont-buy-home-active-duty/

Another Reader

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Re: HELP: Will i be able to rent my property
« Reply #4 on: July 18, 2015, 10:34:24 AM »
Most of the Southern California market has appreciated dramatically over the past few years plus you purchased the property at a good price.  You likely have a profit if you sell.  The tenant will pay the utilities when the property is occupied, you will only pay them when the unit is vacant.  If an accurate cash flow analysis show the numbers make no sense, so I would sell it and take the profit.  You will likely not pay anything in capital gains tax on that profit and you can use it to buy a new property at your next assignment or you can invest it.

HappyRobby

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Re: HELP: Will i be able to rent my property
« Reply #5 on: July 20, 2015, 08:49:02 AM »
The numbers definitely do not work for a rental. I definitely see the argument to sell for the 40 or 50 thousand I could make now. I was just poking around to see if anyone had any bright ideas to offset the margin. And potential develop the property to cash flow. I appreciate everyone's help! And thanks for the links!!!!