So I'm looking to take a job that comes with a pretty kush relocation package. I'm torn on the idea of selling my house or holding it for a rental and appreciation in equity. Curious what this forum thinks. Details below. The House • - I live in Austin, TX. A hot market. Home purchased 2016 for $545k w/ 20% down. Mortgage=$3k/mo, $386k remaining @ 3.25% (includes property taxes and property insurance.), also no HOA. • - the home is in the NW austin area....Cedar park/Balcones/RoundRock/Leander area... Big plans for upcoming developments (Domain North) and employers (Apple Campus). • - The home is a 4br/2ba with a great yard, 1/3 acre, in an all 10/10 school district (BVS) (elem, mid, high), backing up to a golf course, so it feels like a bigger space. • - Zillow estimates currently @ $650k. The Relo: • - pays sellers closing costs, including the full 6% realtor fees if I sell my house. • - pays the buyers closing costs, up to 2.5% if I buy a house at new location. • - I have up to 1 year to utilize the benefits, so I could totally rent out my place and then sell next year. So any input here? Capturing that 6% sellers fee seems HUGE, but I'm worried that if I ever do move back to this neighborhood, I would be priced out and unable to buy in. I think I could rent out my house pretty easily in the $3k/mo range. How do I help make this decision? side note: the new location is Boise, so another hot RE market.

When you're not there, how will you manage it? It won't cash flow (rent = mortgage payment, no money left over for repairs & management), so it's going to cost you money every month to own this property. Is that a headache you're ready for? We are headed into a recession which may or may not impact real estate values. If anything, people are going to be looking for more affordable housing over the next couple years. Plus, the first $250k of gains or $500k of gains are tax exempt (restrictions apply, verify this for yourself) but only if you lived in the property for 2 of the last 5 years. That's an awesome benefit as well. If you take the gain and invest it elsewhere, will you earn a better return than the appreciation on the house, factoring your sweet benefit package, minus a year's holding costs? Probably. We know for a fact it'll lose money every month based on the numbers you provided (unless the rent is massively underestimated). We do not know if the value will keep going up. We also know that unemployment is at unprecedented levels, mortgage delinquencies are way up, and small businesses are closing left and right. The conditions are ripe for falling real estate values. Not good if you're hoping the price goes up and are already cash flow negative. I would sell while the getting's good and start looking for a better home for that money. There are many options for you that will be much less of a hassle than managing a tenant or property manager that loses you money every month. Congratulations on the awesome job deal, that's fantastic.

We just moved to Boise in a similar situation—we sold our primary and have a year to familiarize ourselves with boise before missing out on closing cost assistance through work. My one word of caution is that it is pretty awful to be a renter in Boise. It is at least $300-400 more a month to live in a completely gross rental. We do have pets, which def makes it harder, but If you plan to rent here, expect to pay out the nose or live in a complete dump. Another thing we’ve found interesting is the large gap between income and housing expense here. Don’t quote me, but I think the average income is something like $48,000 annually, which is way too little to afford the vast majority of homes. I know people who make $35000 a year and live in homes that have appreciated to the &400,000 range. We had planned to buy right around when corona hit. Prices are still going up here for the time being, so we’re ready to stop trying to time the market, stop being renters, and just buy something we can afford. Congrats on the move to Boise! We absolutely love it here!

@Adam L. I’ve relocated 5 times over the last 10 years, and have always sold my primary. Sometimes I’ve sold right away and other times I’ve sold within 2 years of moving out. The benefit of capital gains tax exclusion on your primary residence is an advantage often unparalleled - you don’t want to lose it. It’s often easier dealing with a sale while you are local, but the timing of the sale is up to you to decide. If you’re concerned about buying back into an appreciating market, don’t forget about all the reno benefits you’ll receive when you come back, so that may defray some of the higher re-entry costs. You’ll also have the benefit of investing your sale proceeds so hopefully that will provide additional capital if needed to buy back into that market.

In any other market I would tell you to sell. But this is Austin. And a prime part of Austin that's set for more growth than any other part of Austin. All the data points to Austin now like SF or NY in 1970. I know you're not supposed to hedge completely on appreciation, but if your renter can cover PITI, I would hold and wait. Austin is not like the rest of the country. Cushman and Wakefield's report of the decade and forecasting 2030 has Austin outperforming all US cities by a landslide. Tesla is rumored to be moving to Austin right now.Any other market I would sell. Austin is a buy and don't let go. No one ever got truly wealthy off cash flow, they got it from appreciation.

@Adam L. Can you buy in Boise without selling in Austin? If you can thats what I would do. You may be cash flow neutral but you are paying down the mortgage. Plus gaining appreciation. Austin A class neighborhood will likely hold its value well. And you should be able to get good tenants that preserve the property. Look at the long term picture.

@Adam L. Sell it! If the rent is 3k on a 545k value, that is a .55 rent to value ratio. You can sell and invest in places with a rent to value ratio of .8-1%, with much lower taxes, that will cash flow nicely.

If you can AFFORD to hold the property for the next 5-10 years accounting for a 10-20% drop in rents (never know what the market will do and it's best to plan for the worst), hold it! Real wealth, generational wealth is generated through appreciation - period, dot, end of sentence. With that said, taking advantage of the capital gains tax exclusion is an incredibly valuable tool and never a bad option. Talk to a CPA and weigh your options carefully.

I think it depends on how long you will be gone and if you plan to move back. If you aren't sure about the new job or only plan to be there a few years and move back, I'd rent it. Once you are there, if you like Boise, you can always list the home within that first year.

You're getting such an enormous benefit from the company covering all of those costs, plus the capital gains exclusion (if you qualify). You have to get some killer returns to make up for those in the short term. The only way you're priced out of this neighborhood later is if you take these gains and blow them. Or if this neighborhood's appreciation exceeds anything else you could invest the capital in. Consider where the overall market is right now. It seems very unlikely that any neighborhood will considerably appreciate within the next few years. Take the gains and turn them into more gains! Then you have more money to buy a house with in the future.

Buying & Selling Real Estate

6yFollow

Corporate Relocation...Do I keep my house to rent or sell it?

Adam L.

Member since 2018 · 82 posts · 16 votes

So I'm looking to take a job that comes with a pretty kush relocation package. I'm torn on the idea of selling my house or holding it for a rental and appreciation in equity. Curious what this forum thinks.

Details below.

The House

- I live in Austin, TX. A hot market. Home purchased 2016 for $545k w/ 20% down. Mortgage=$3k/mo, $386k remaining @ 3.25% (includes property taxes and property insurance.), also no HOA.
- the home is in the NW austin area....Cedar park/Balcones/RoundRock/Leander area... Big plans for upcoming developments (Domain North) and employers (Apple Campus).
- The home is a 4br/2ba with a great yard, 1/3 acre, in an all 10/10 school district (BVS) (elem, mid, high), backing up to a golf course, so it feels like a bigger space.
- Zillow estimates currently @ $650k.

The Relo:

- pays sellers closing costs, including the full 6% realtor fees if I sell my house.
- pays the buyers closing costs, up to 2.5% if I buy a house at new location.
- I have up to 1 year to utilize the benefits, so I could totally rent out my place and then sell next year.

So any input here? Capturing that 6% sellers fee seems HUGE, but I'm worried that if I ever do move back to this neighborhood, I would be priced out and unable to buy in. I think I could rent out my house pretty easily in the $3k/mo range. How do I help make this decision?

side note: the new location is Boise, so another hot RE market.

1 Reply

270 views

Corporate Relocation...Do I keep my house to rent or sell it?

Corporate Relocation...Do I keep my house to rent or sell it?

Most Popular Reply

41 Replies