Updated 16 days ago on . Most recent reply
To Rent or Sell - Doesn't seem like there is a great option
My wife and I purchased a newer townhome about 2 years ago in the Denver area and now unexpectedly need to relocate to the Midwest. Since purchasing our home the value of the property has decreased. This brings us to our options:
1. SELL - The property value has decreased to the point where our 10% down payment would be erased when we sold the property - walk away not owing anything but not get anything back.
2. Long Term Rental - In briefly looking at comps in the area we could rent out the property for ~$1200 less than the current monthly mortgage. So we would be sinking money into the property, but also building equity and have the opportunity to act as landlords. As a note: The HOA dictates that rentals must be long term rentals, no STR.
Given the current housing market conditions here in Denver - home prices down, supply increasing it seems unlikely that the market will get better in the next year or two to sell (Seems like the opposite of the stock proverb of sell high, buy low). However, we may be able to lock in lower interest rates and come out better on the renting, while building additional equity in the property. It seems like we could take the hit today, and lick our wounds on a bad deal or take a gamble renting out and slowly bleeding it for a bit either selling it when the market gets better or hoping that the gap closes and we can turn a profit on renting.
Are there any other angles that we aren't seeing? What would you do?
Most Popular Reply
Before deciding, look at a third angle. Ask your lender if the loan is assumable, some buyers will pay a premium for a lower rate. Also confirm the true rental number with a property manager, not just comps, and see if there are ways to narrow the gap even slightly.
If the loss would create stress or limit your ability to invest elsewhere, selling and redeploying your capital might be the best move.