Hi! My husband and I are moving to El Paso, and we are hesitant to sell the house because our current home is by the new stadium. We want ro rent it out for a year or so and live on a rental in El Paso for that period of time. This would be our first rental property, and we don’t know if this is the best thing we can do. We are open to suggestions. Thank you all!
If you aren't confident in managing the property on your own, I would contact a good property management company who can list it for you and get you a good rent rate. It can become a headache managing from afar if you don't have the right systems in place. I'm sure someone will chime in and give better detailed advice than I've given. Hope it goes well and welcome to El Paso!
Welcome to El Paso! Glad to welcome people from Austin! we really hope you LOVE El Paso, let me know if you need any info on the market, etc.
Now to answer your question, Are you planning to keep the property and use it as a Short Term Rental or regular rental?
Austin has seen a lot of appreciation during the last few years, which can continue to go up or not and that is the risk, I call appreciation simply speculation, there is ZERO control that you can do if you only invest with appreciation in mind. An investor makes decisions on how much a property cashflows, where is it located, vacancy rates, and all of the demographics of the area in mind, but it never invests with appreciation in mind as it's simply impossible to quantify it. What if a large employer moves of out town simply because it became too expensive? Rents might go down but not as much as what the properties will. It could be your time to cash out on the appreciation you have and use some of the funds to start investing in a cash flow city? Could be Tucson, or El Paso? or even somewhere in Ohio. Preferably invest where you live, if the numbers make sense of course.
I know that rents in Austin are not as good as other cities,
You can rent a house here in ELP that costs $150K for $1400 or more a month if you know where to buy (much better if its multi family units). What about Austin? How much could you rent your house vs how much it costs?
Talk to a good property manager, get an idea of the rent (and vacancy rate), and figure out if you can cash flow. The rent vs. buy numbers are a bit out of whack in Austin, but if you have enough equity in your house, you might be OK. Austin is a great place to own property for the long-term, so if you can make it work, renting would be ideal. My 2 cents.
Hey there Edith. Welcome to the Sun City!
I recommend requesting a rental analysis from a local Realtor that specializes in Property Management on the rental rates you can get for 12 month+ leases in your area. I recommend talking to about 3 property managers before making a decision on who to use. Compare management fees, other fees, and compare the services provided.
Be sure to check out their reviews, and maybe ask them questions such as their experience level, how many properties they manage, what their maintenance guidelines are, etc.
Because of the location you are in, I'd even consider doing some AirBnB/Homeaway research. (This "short term rental" strategy is a little more hands-on, and volatile compared to renting your home for 12 month+ , but it can possibly produce more income compared to 12 month lease rates, especially in cities like Austin and in areas like Downtown).
I know there are certain regulations for short term rentals passed in recent years in Austin so I would research that as well before going that route.
Keep in mind none of these strategies are guaranteed to produce positive income. The home still belongs to you therefore if it gets damaged, or if certain repairs are required, you need to budget for that and be prepared for the worst.
Additionally if you bought that home in Austin as your Homestead (primary residence) you should be exempt from paying Capital Gains tax if you sell it for a Profit (If you are Single, you will pay no capital gains tax on the first $250k you make when you sell your home. Married couples enjoy a $500k exemption - Source: Google)
So once you move into another primary residence, and if you begin using this home as a rental property, it becomes an "Investment Property" in the eyes of Uncle Sam which means that once you Sell that property in the future, you are subject to paying Capital Gains tax on that profit.
Hope that makes sense & helps!
As always: please consult with attorneys for legal advice, and a IRS for tax advice.
Thank you, everyone! I sincerely appreciate it. We are running the numbers are different scenarios to make sure we are making the best decision possible with what we have and know.
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