I own a rental (single family home) purchased 10 years ago for $189,000 in south Florida. In an ok, but not good neighborhood.
Current value is about $275-300,000 depending on how much work I’m putting in. I’m remodeling at the moment after the tenants moved out a month ago.
I owe $150,000 at 5%. Mortgage, insurance, taxes and lawn services are $1370. Maintenance is extra. Roof will probably need replacing in 5-7 years. AC around the same time.
I’m considering two options but are also open for other suggestions.
1. Cash out refinance (or Line of credit or?) and then rent it out again at $2100.
2. Sell it.
Either way I’d use the cash for a down payment on a “new” home for the family as we have outgrown our current house and then rent this one out as well.
The big capital expenditures (roof) are what scares me but then again paying fees for selling also adds up quickly.
I’m going back and forth, please help.
Are you putting money aside for Capital Expenditures? If not, then start putting aside for the roof now. AC is something you can purchase off Craigslist for a fraction of the cost of new, but unfortunately, not so with a roof. If you put aside costs for maintenance, capital expenditures, and vacancies, you should be just fine. In essence, let your renters pay for the repairs, not your equity.
Thank you Lisa.
Sounds like you think I should keep. I’ll start saving. So far profit has been used in other ways ;-)
Seems like a no brainer .If you owe 150 and it’s worth up near 300 and your getting a good high steady rent then I’d just keep it . Why on earth would you sell a golden goose when it’s laying gold eggs for you in the forms of appreciation and rental income ? If your hard up for cash for another place I’d do a heloc./ cash out refi . That way you can get your needed cash , yet still keep the property that’s cash flowing and appreciating . The best time to buy is always the best time to sell is never
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