Should we sell our former home or hold it?
We are just starting out in real estate investing, so I would appreciate input on our situation.
We have used our former home as a rental for the last three years. We've been using a property management company who rents it far below market and whom we're unhappy with for other reasons.
We can either sell this spring/summer when the lease runs out, or keep it as a rental and manage it ourselves.
We bought it in 2006 (sigh) for $130K. We owe $110K and could probably sell it for at least $155K if the DFW market stays strong.
Selling = $35,000 after making repairs and realtor fees
Rental = $1400-$1,500/mo (I am pretty confident that this is a conservative amount after months of stalking craigslist and MLS) with entire payment of mortgage, taxes, insurance of $1080
Cons: The house has had recurrent foundation troubles (we paid $17,000 to fix it with a lifetime transferrable warranty, though), trashy next-door neighbors (they are really bad), and is not in a good school district. Pros: It's in a great central location with easy access to all the best parts of Dallas, part of a nice neighborhood overall, and is a lovely, solid house.
If we sold it, we would save some of the money, use some of it to improve our own home, and use some of it to reinvest in real estate. (Probably $20,000 toward 20% down on another investment property.)
The property management company we're using has never had a lease renewed in the three years they've had it. I'm not sure if that's because of their crappy management, or because of the problems I mentioned above. I have overall been pretty unhappy with the quality of the tenants.
The house itself soooort of fits into our business plan -- it's a 3/2/2 in a nice middle-class neighborhood -- but I'd really like to focus in the future on houses zoned for better school districts.