Sell or Rent

13 Replies

I bought SFR in Simsbury Ct in 2007 and recently I had to move to Charlotte, NC because of my Job. I am looking for advise, whether I should sell my house or Rent it out.

Purchase price in 2007   $350,000

Outstanding Loan: $256,000

Repair Cost: $20, 000

ARV: $295,000

Expected Rental: $2,200

I agree, sell. It seems like the expected rental income would barely (without knowing your actual mortgage numbers) cover the payment. On top of that, $20k in repairs are needed so if you kept, that would be some maintenance that you'd need to take care of in order to get max market rent.

Sell, take your profit and find another investment, possibly in NC closer to where you are now.


It looks like prices are generally trending down in Simsbury Ct. (source zillow) and demographics is stable (source wikipedia). So either you share with us a good reason why the area should go back up, or you should get out as soon as practicable.

BP community thanks for prompt responses

Michael thanks.

Jacqueline, my mortgage is $1,960.

Sabastien, I have no reason to believe prices will appreciate with a pace as depreciation happened.

You have several choices.  

  • Sell the property as is
  • Fix/repair, then sell
  • Fix/repair, then rent
  • Rent as is, repair as needed to make property rent ready.

You have to run the numbers.  Will you have a negative cash flow if you decide to keep the property as a rental?  If not, or slightly above break even, then you might want to keep the property as a rental.  If the rental cash flow is negative, can you afford to carry it and offset the negative cash flow with tax savings from a residential rental activity?

You don't tell us what the FMV for the property is in its current condition. If the property needs $20K in fixup to get the best sale price, can you afford that? If so, how much will that improve the expected sale price? It seems that you are selling at a loss now, so is it practical to spend that much money for renovation if there is no return on investment?

Run the numbers with your accountant if you want someone else's informed opinion.

here's the numbers as I see them:

Rent. $2200

Uncollectable rent. $220

Net rent $1980

Maint $110

CapEx $220

Operating income $1650

Mort payment (assumes taxes & insurance included) $1960

Monthly cash flow -$310

So every month you rent the property you will lose $310. You would have to have 1.3% appreciation just to break even. I would sell and take the almost $40,000 and reinvest in a property that will return 15% or more.  You will be far better off. 

Seems like selling is likely the best option. If you haven't already done so, there is a nice Rental Property Calculator under the tools section to help you run the numbers. Best of luck to ya

Originally posted by @Khurram Bashir :

I bought SFR in Simsbury Ct in 2007 and recently I had to move to Charlotte, NC because of my Job. I am looking for advise, whether I should sell my house or Rent it out.

Purchase price in 2007   $350,000

Outstanding Loan: $256,000

Repair Cost: $20, 000

ARV: $295,000

Expected Rental: $2,200

 Ultimately, you will need to factor in your current expenses for the Simsbury property, then consider property management costs; and allow maybe $75.00 for ongoing maintenance costs (as a buffer). Creative minds find a way. You will need to consider your current financial capabilities. Are you just getting by with monthly expenses? If so, the Simsbury property, along with tenant requests/concerns could become a big stressor for you and your property manager. Are you renting, or buying in Charlotte, North Carolina? If renting, I would suggest keeping the Simsbury property, and letting tenants pay your mortgage down. 

Tip: If you are a real estate investor, because of your move to Charlotte, and not by personal interest in real estate investing as a career; then consult with a real estate professional to see what the Simsbury property needs to have to maximize the rent in that particular area. 

Based on your information, your property has some equity, although very little. If you are very capable, continue to build your equity, and long-term relationship with your mortgager. Over time, your good standing with your mortgage company, and the equity in your home will easily propel you into a good position for additional real estate investments. North Carolina could be a great state to invest in properties.

You decide if you are willing to put in the effort. 

Anthony thanks for tips.

When you say  after sometime my property can propel, does that mean I should get new appraisal and refinance to get more cash out and buy another property in Charlotte. This would mean I would have higher amount of loan and my mortgage amount would go up. If my rent does not change much, then will it not create more burden.

@Khurram Bashir I would second the post of @Roger Pokorny regarding the sale but I also offer an alternative. You can sell using owner finance give your mortgagee the chance to renovate. This way you are zero out of pocket for repairs and while having the mortgage paid down. You walk away with a healthy down payment and the opportunity to invest that capital in a new property in NC. Get a loan servicer that understands wrap around mortgages to handle the admin paperwork and credit reporting for the mortgagee.

Updated almost 6 years ago

The term should be mortgagor for the person financing the property. The mortgagee is the lender who is also the seller in this owner finance example.

Originally posted by @Khurram Bashir :

Anthony thanks for tips.

When you say  after sometime my property can propel, does that mean I should get new appraisal and refinance to get more cash out and buy another property in Charlotte. This would mean I would have higher amount of loan and my mortgage amount would go up. If my rent does not change much, then will it not create more burden.

 No, although that would be an option available to you, that is not what I meant. As with most business decisions, critical thinking skills are needed in order to scale upward. Your property could propel you in a nice position with your current mortgagor for new loan products, or credit lines for your future investment ideas is what I meant. 

Investors could have different methods to accomplish the same goal. I firmly believe an investor's strategy should include leveraging other peoples' money to complete deals. If you were to decide to refinance to get more cash out and buy another property in Charlotte, you would definitely need a good exit strategy in place for the new property. 

Of course, refinancing to cash out will have some known variables, and some unknown variables. Your credit strength, and financial strength will decide if a refinance will be more burdensome for you. I am unable to determine that answer for you. I can only say that 'over  a timeframe' that you choose before refinancing, a good loan product with a reduced interest rate from your current interest rate, could leave you in the exact condition; or even better condition than you are currently, in especially if you include any money above your mortgage payments that you may receive in rental payments. Think through your decisions.

First find out if the homes in the area is selling. Contact 2 realtors to get a cma
Also while their running the cma have them provide you with the rental numbers

Now if the property needs 20k in repairs a sale will not give you top dollar for the property especially if those repairs are noticeable or are picked up during a home inspection.

Then you can make an educated decision.