This is in California. Purchased home for 525k and now worth about 850k. 13 years left on mortgage at 2.675% rate. Property taxes about 540 a month (prop 13). Total current expenses around 3200 a month. Would probably rent out for 3500-3750 a month. Should I sell or rent it out? Never been a landlord, moving a few miles away.
any feedback would be appreciated
Hi @Bob Dole . Do your current expenses include saving for repairs, maintenance, capex, etc.? Are you planning on finding and vetting tenants, doing your own repairs, and dealing with tenant drama; or will you be sourcing all of that to a property management company?
Based on your rent range and your total expenses, I'd say you've got some slim margins if the expenses include what I've mentioned. If not, you'll need to carry the difference. Maybe you can do that, but what if rents go down or you have a vacancy? How much are you willing to put into this of your own money?
How much has been your maintenance and repairs so far? How old are the furnace, A/C, roof, etc.? Make sure you're budgeting for all of that.
Coming from someone who has 2 rentals which were former residences and not purchased as investments it can be tough to make it work. Especially at the start and in a market such as yours.
It might be better to sell it and take advantage of the tax free money and put that towards an actual investment whether that be near you or somewhere else.
Either could be a good option for you. You would get some good cash flow if you keep it. You may need to consider the tax consequences of selling a personal residence VS REntal.
If you want to keep it for a long time, , with that excelent interest rate, you can't rally go wrong on this route either.
Get a good Property mgmt company and they will handle it all for you.
Best of luck! HouseMatchCA . Com
If your potential sale price of $850k is correct, I would sell. Compare that to a potential $4k/year cf, it would take almost 5 years to get the same money you would if you sold (assuming 15% fees/commissions/closing).
If you reinvested the profit from the sale, you should be able to still get the same or better cf in a different property.
I'd sell. The closing costs and commissions would leave you with hundreds of thousands of dollars profit if you could get the 850k asking price. It'd take you decades to recoup that amount in the form of rent.