Should I rent or sell my home?

6 Replies

Hi everyone. I want to know what I should do.

Bought my home for $312k. Values in the neighborhood are btwn $490k-515k. We owe aprox $235k with a balloon payment at the end of $57k. (We had a hardship modification about 6yrs ago)

Current mortgage is $1800 and we have family members that say they would rent my house for $2300. I would pocket that money for upgrades or repairs or even put it towards the mortgage to get it paid off faster.

We would be moving out of state and staying with family members rent free for at least a year til we buy another house or decide the move wasnt for us and we can move back to our original home. Were torn on the issue because we like the idea of having passive income and having property that we can possibly pass on to our kids to get them started on building wealth or buying their own home if they want to sell our house. Pls advise on how you would navigate this.

In my honest opinion I would rent the home. Especially considering it is family (hopefully family you can trust) you have the benefit of having tenants in the home that will more often than not, be taking care of the home better than most tenants would. After expense you should have some decent cash flow, as well as the back up plan of moving back should the move not work out for you. Additional equity in your home is always great! However, if your balloon payment is coming due soon I would seriously consider selling or at the very least inquiring about a refinance with a mortgage professional. Rates are still good (probably not as good when you locked it down a few years ago) and with the additional appreciation you should have good equity as well as get solid terms. Plus, lenders often look at all income when it comes to approving you for a mortgage and a cash flowing rental would be supplemental income that could help you get better rates should you decide to purchase a home in your new market. 

@Sean Barnebey

Thanks for the quick reply. There is still 26yrs left on the loan since we did the modification. Family would def take care of the home. Its my father in law who is handy around the house. So any repairs that arise can be handled by him and I will compensate him accordingly.

@Mike Cruz sounds like you would be set having a trusted family member take over it. For the fact that you were able to find someone you can trust to take over payments by renting, is a hell of a deal. That way you continue cash flowing while you get things back in order. I would suggest look into another rental you can invest, that's if you don't already have a multiple rental portfolio. Might as well continue to cash flow and make enough where you get that "perfect" house you've been wanting down the road.

FWIW, give some thought to not doing business with friends and family. It can lead to many everlasting problems. I would research if $2,300 is below/at/above market rate in your area. Check listings on Zillow, and use rentometer's website. 

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