I bought my primary residence in 2010. While living there I renovated 90% of the house, because it was something I enjoyed and thought it would substantially increase my equity. Unfortunately I didn't do my homework and I sunk more money in the house than I can get back out of it if I sell. I have always had an itch to get into real estate investing, so I am considering keeping the house and renting it out when my family and I move to a bigger home this year. We do not need to sell our current house in order to afford our next home. Should we sell or rent our current home?
Hi @Brian Northrop and welcome to BiggerPockets!
Assuming you did a great job on the renovations, and also that you don't live somewhere that restricts doing so, I would lease/purchase the house.
I'd ask for slightly-above market rent, set the purchase price at some reasonable markup from current value, and require 3-4% of the purchase price in non-refundable earnest money to be paid at lease signing.
You'd get all the benefits of renting to a quality tenant and (ideally) a top-dollar sale price with no negotiation, inspection, or buyer commission!
What's done is done. It's called a sunk cost and it is what it is. The amount you spent on it shouldn't shouldn't affect your decision on whether to sell or rent.
If you rent it, how do the numbers look? Will the rent cover the expenses?
Yes. I have not factored the appreciation or equity into an ROI, but my cash on cash ROI with just my investment would only yield 2% annually.