Rent or sell my San Diego County home?

Question

Hi everyone, looking for advice on whether I should rent or sell my home. I’m moving about 5 hours away for a job and to be closer to family, so I can’t live in the house anymore.

The house is a 2 bed / 1 bath in San Diego County, a few miles from the beach in a solid working-class neighborhood.

I bought it in 2023 for $565k and put about $60k into renovations. After a refi last year (5.25%), my monthly payment is $3,750 (includes taxes and insurance).

Based on comps and conversations with a realtor, I could probably sell for around $650k, which would leave me with about $60k after realtor fees, essentially letting me break even.

II could rent between $2800 - $3,000/month.

Estimated monthly numbers:

· Mortgage (PITI): $3,750

· Maintenance estimate: $300

· Rent: $3,000

Total monthly cost: ~$4,050

So I’d be negative about $1,050/month.

Of my mortgage payment, about $650 goes toward principal each month. So I’m wondering if the “real” cost of holding the property is closer to $400/month after accounting for the equity gain.

A few questions I’m trying to think through:

1. Is it worth holding the property in the short term given expected appreciation? Homes in this part of San Diego County have historically appreciated around 3% or more annually, especially near the coast.

2. Are there any tax advantages I’m missing? I make over $150k, so I believe I don’t qualify for the rental loss deduction and I’m not a real estate professional. Are there any other strategies that could help offset the monthly loss?

3. Am I thinking about the “true cost” of the property correctly, or should I strictly view it as losing $1k/month?

Emotionally, I’d prefer to keep the house. I’ve put a lot of time and love into it, and long-term I’d like to use it as a retirement home since I’ve vacationed in this area most of my life.

Financially, I can afford the $1k/month loss, but I don’t want to make the decision purely based on emotion.

I would plan to self-manage the property. I’m pretty resourceful and still have a lot of good contractor/maintenance contacts in the area, so I’m comfortable handling repairs and tenant issues remotely if needed.

Any feedback is appreciated — good, bad, or ugly.

Andrew Glisson · Answer

Own couple hundred rentals and wouldn't want to be that far upside down on cash flow. Take the $60k and find something that pays you!

Michael Eskenasy · Answer

You’re actually thinking about this in a pretty reasonable way already. When situations like this come up, I usually try to separate the decision into three different lenses:

1. Cash flow reality

On paper the property is negative about $1,050/month. Your point about principal paydown is valid, but it’s still cash leaving your pocket each month. The principal portion is really forced savings rather than income.

So from a pure cash flow perspective, you should think of it as carrying a property that costs you roughly $12–13k per year to hold.

2. Long-term asset quality

The other side of the equation is the location. Coastal San Diego tends to be supply-constrained and historically resilient. Properties close to the coast often behave more like long-term capital assets than cash flow rentals.

So the real question becomes:

Are you comfortable paying ~$12k/year to control a property in that location long term?

For some investors the answer is yes, especially if the property fits into a future lifestyle plan (like your retirement idea).

3. Flexibility

One thing worth considering is how long you realistically plan to hold it. If you convert it to a rental now and sell within a few years, you may lose access to the primary residence capital gains exclusion unless you meet the “2 of the last 5 years” rule.

That doesn’t necessarily change the decision, but it’s something to factor in if you think you might sell in the medium term.

The way I’d probably frame the decision is less about whether you’re “losing $1k/month” and more about whether you’re willing to pay that carrying cost to keep a foothold in that market.

Curious how long you realistically see yourself holding the property if you decide to keep it — 5 years, 10 years, longer?

Alex Rastorgouev · Answer

@Caleb Ram great breakdown of the numbers. The other replies cover the qualitative side well, so let me add something nobody has done yet — run the actual return on equity math so you can compare apples to apples.

Your equity position right now: ~$60k (sell price $650k minus ~$590k loan balance). That's also roughly what you'd walk away with after selling.

Scenario: Hold for 5 years

Cash flow loss: -$1,050/month x 12 = -$12,600/year

Principal paydown: ~$650/month x 12 = +$7,800/year

Appreciation at 3%: $650k x 3% = +$19,500 in year 1 (compounding each year)

Depreciation tax shield: ($625k cost basis / 27.5 years) x your marginal tax rate — if you're at 32% bracket with $150k+ income, that's roughly $7,270/year in tax savings

Year 1 total return: -$12,600 + $7,800 + $19,500 + $7,270 = +$21,970

On $60k of equity, that's roughly a 37% return on equity in year 1. Even if you use Dan H.'s more conservative flat appreciation assumption for the near term, you'd still be looking at ~6% return on equity from just principal paydown + tax benefits — which at minimum matches the risk-free rate.

Over 5 years with 3% appreciation, that $650k property hits ~$753k. Your equity grows from $60k to ~$200k+ (appreciation + principal paydown), minus the ~$63k in cumulative cash flow losses. Net equity position: ~$140k vs. $60k today.

The sell scenario: you take $60k and invest it. Even at 10% annual returns in the S&P, $60k becomes ~$97k in 5 years. So the hold scenario roughly doubles the sell scenario in total wealth — IF San Diego appreciates at 3%.

The key variable here is appreciation. At 0% appreciation, holding barely breaks even vs. selling and investing. At 5% (which Dan H. suggests is closer to SD historical averages), holding wins by a landslide.

I'd suggest stress-testing these numbers at different appreciation rates. I use the ROI calculator at calculatorica.com/finance/roi for comparing scenarios like this — plug in your net annual return against your equity to see where the breakeven appreciation rate is for your specific situation.

Bottom line: the math favors holding if you believe San Diego appreciates at 2%+ annually and you can stomach the monthly cash flow hit. Given your $150k+ income and emotional attachment to the property, holding seems like the stronger play.

Joe Watson · Answer

I would personally keep it, we are in a downturn currently. as soon as the money printing begins we will accellerate for several years again, you may end up cash flowing sooner than you think. You bought the house for a reason. does the market rent change that reason? San Diego rents will go up, Home values will go up. Iflation is undeniable at this point, dont want to become cash rich in a period of high inflation, want to own assets that rise with inflation.

Ashish Acharya · Answer

Hey Caleb, sorry I'm a little late to this one. Turning this into a short-term rental would definitely have been your best bet to overcome the monthly numbers and pick up some real tax advantages, too, potentially turning that passive income non-passive and offsetting other non-passive income like W-2 and business income.

There are a few other angles worth thinking through. If you do generate passive losses on this property, they're not wasted, they can offset passive income you might have elsewhere, like other rental properties, stocks, CDs, certain K-1 income from LLCs you don't materially participate in, etc. And if you don't have passive income to offset right now, the losses get suspended and carried forward until you do or until you eventually sell the property in a fully taxable disposition, at which point all those suspended losses free up.

I saw someone else mention turning it into a mid-term rental, and I think that's a really strong play. If you're close to a hospital, Furnished Finder is a platform for landing traveling nurses. MTR rates usually fall between long-term and STR, and you skip most of the STR regulatory headaches. It also works well for relocating professionals, insurance-displacement tenants, etc. Another option is renting by the room, more management overhead, but in a 2/1 a few miles from the beach you might be able to push gross rent higher than $3,000.

If you want to keep this place, and it sounds like you do, I'd find a way to make it work. Your long-term retirement angle is real, and 10-20 years of coastal San Diego appreciation is a very different math problem than just looking at monthly cash flow. And you got into an investment property without having to jump through the hoops of getting an investment loan, which is nice too.

I'd definitely loop in a CPA who can look at your overall tax picture, not just this property in isolation. You don't want to miss out on any opportunities to save, and you definitely don't want anything you'd have to go back and fix later on your return. Happy to connect!

Jim Johnson · Answer

Thoughtful breakdown — you’re already looking at the right variables.

A couple lenses that might help clarify the decision:

1. Cash flow vs. total return.From a pure operating standpoint, the property would be ~$1k/month negative, and that’s the real cash leaving your pocket. The $650 principal paydown is forced savings, but it doesn’t help liquidity if something unexpected happens.

2. Risk tolerance.With margins already negative, things like vacancy, a turnover, or a larger repair could temporarily widen that gap. Coastal markets tend to appreciate long term, but the short-term operating risk is still real.

3. Strategic hold vs. emotional hold.If your goal is to eventually return and use it as a retirement property, the decision becomes less about short-term cash flow and more about whether you’re comfortable subsidizing the asset for several years.

4. San Diego fundamentals.Near-coastal supply is limited, which is why many owners accept negative carry in that market. The question is whether you want to hold through that phase or redeploy the equity somewhere that produces cash flow.

You’re framing the math correctly — the real question is whether you’re comfortable treating the ~$1k/month as the cost of holding a long-term asset in a constrained market.

Caleb Ram · Answer

I’m very close to where Ocean Kamp will be! STR is was what I thought I’d be able to do if I ever decided to leave the area however as of Feb 2024, Oceanside does not allow STR’s outside of the Coastal Zone (Basically everything west of Coast Highway). I believe they grandfathered in all prior STR’s had you filed it properly with the city.

Maybe you can provide input if they actually enforce this as I know people in other areas of the County who do STR against fity regulation with no problem.

Ashley Bitner · Answer

@Caleb Ram - I'm in Oside too! (STR). If you can swing it financially, I would definitely hold onto it and rent it out. Are you near where they are developing that Ocean Kamp? That might create some demand for MTR and STR!

Ashley Bitner · Answer

@Caleb Ram - maybe MTR potential for all the crew developing the area? Plus Olympic stuff coming in a couple of years!

Ashley Bitner · Answer

@Caleb Ram Oh hmm that's a bummer that they aren't allowing permits outside of the coastal zone. I've always operated ours with a permit, so I don't have any personal experience with city enforcement, BUT I do have a friend down the street who, for a short period of time was renting out a room on Airbnb, and within about 3 months or so she got a letter from the city telling her she was operating an illegal Airbnb and needed to stop.

Rent or sell my San Diego County home?

Rent or sell my San Diego County home?

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