Advice on Selling vs. Renting

[Nate DeRochie]

Hey all. I am looking for some advice. My wife and I bought an old fixer-upper in Southeast OH about a year and a half ago. We paid just over $80K for this property on the edge of a town of ~5,000 (within walking distance to a nice park and grocery store) with ~7 acres and an adjacent (now empty) building lot included. We have since completely gutted the home (lower story floors, joists, beams, all plumbing and electric) and rebuilt it into a pretty nice 3BR, 2BA, 1,500 sq ft home, which has cost us about $110K. We did almost all of the labor ourselves with help from more skilled friends, all with the intention of us moving into the home.

A few months ago, I was offered a good job back home in Central NY for which we have relocated. We still have some final projects to finish up on the house in OH, but they should be done within two more trips in November and December.

I have a Realtor who is looking to get the house sold, but with current market conditions in the area, I believe we'd either end up losing our investment (not including labor) or just barely breaking even. My guess is that we could get between $175-200K, which is what the Realtor's thinking as well. We only owe ~$65K on the property, and I believe the area's rental market could handle about $1,350-1,500/month for a house like this one.

Any thoughts or advice?

[Patrick O'Sullivan]

@Nate DeRochie Sounds like you’ve put a ton of work and care into the property, nicely done on taking it from a gut job to a fully renovated home. Given your numbers, renting it out might make sense if you're not in a rush for the cash and want to avoid locking in a potential loss right now.

At ~$1,400/month in rent (splitting the difference), you'd likely cash flow decently after factoring in taxes, insurance, maintenance, and professional property management, especially with a low mortgage balance. Plus, you'd still be building equity over time.

That said, some things to think about:

• Do you have (or can you set up) reliable property management in the area?

• How strong is the long-term rental demand in that specific part of town?

• Are there any local landlord-tenant laws or quirks that might be challenging from out of state?

If the area has solid rental fundamentals and you’re comfortable being a remote landlord (or hiring help), this could be a great long-term hold while giving the market more time to improve before selling.