Sell or Rent my current home??

Question

So I'm seeking advice on a current situation that I'm in and would appreciate any feedback. Currently the economy over here is going down due to the low oil prices in my area I got laid off from my job and considering a move out of state. My home that I live in is only 1.5 years old  and I've already built some equity in it. I bought it for 192,000 and a same home in my neighborhood sold for 218,000 last month. Problem is my house has been listed for almost 3 months now and hasn't had any bites just a few showings and I'm sure it's because the economy is going down here. I'm starting to consider instead of selling the home since I'm not in need of the money to just putting it up for rent. The only thing I'm worried about with that is how long it might take to rent out my home. It's a 4/2 and I've done some research and found that I could get somewhere around 1500$ a month rent and with that I'm worried on how long it may take to find a tenant. I'm just seeking any advice to help me decide what I should do. Thanks

Elizabeth Colegrove · Answer

My husband is active duty military so we move ALOT. Still I have turned that transient nature into a positive. We buy expensive houses as our home with as little down and than rent them out when we leave. For example our 239k houses rents for $1775. So we have learned to work on very small margins. One of the things we have learned to do is eliminate vacancy as much as possible. I do that buy pricing the house right, taking good ads, requiring 60 days notice (check your states, mine allow this) and showing the houses quickly. We have done very well doing this.

We have very little vacancy and have been very successful keeping our house filled and the checks coming in.

PS- Having a very good lease is another key to being successful because preventing them from just walking out is another important key to keeping vacancy down. https://www.biggerpockets.com/renewsblog/2015/10/1...

Good luck!

Cody Purtle · Answer

i won't have an issue with cashflow. I would be worried on how long it would take to find a tenant though.. And my price is very reasonable for the area and type of home. I would hate to sell it below market value.

Jake Henrion · Answer

Hello

You need to run some numbers first before you make a decision to determine if renting out your property will produce positive cash flow.

If it produces negative cash flow it probably isn't worth your time even if the property appreciates and you still have your equity built

If you were to rent for 1500 a month you should calculate all other expenses involved in the property and subtract from 1500 to determine cash flow. Expenses include: mortgage, insurance, taxes, capital expenditures.

Total income-expenses= cash flow.

Then you can figure out your annual cash flow and divide by your total invested capital to find out your cash on cash return.

Total annual cash flow÷total invested capital

Generally people look to see around 2% but it's up to you what you think is a good return on your investment

Larry Turowski · Answer

@Cody Purtle Most investors would not buy a $200K home to rent it out for $1,500/mo.  That is essentially what you'd be doing.  What are you asking for the house?  Why don't you lower the price?  Price cures all.  Also, if prices continue to slide, the value of you home might be going down faster than your equity payoff.

Sell or Rent my current home??

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