Bought new home, should I rent old one?

Question

3 months ago I bought a new primary just 10 min down the road. My old primary is in a small town of around 800 people. I already own 8 other properties in a bigger city nearby that do extremely well. I'm beginning to get the old house ready to sell or rent. Here are the numbers.

3 bed, 1 bath, 2 car garage 1220sq ft

Market value : $150-160K

Current interest rate : 3.625%

Equity minus closing costs if sold: $24,000

Market rent : $1500-1650

Mortgage (includes taxes, and insurance) - $950 per month

I'm on the fence on this one! I'm leaning towards renting it.

Patricia Steiner · Answer

Consider listing it for both sale and rent; you'll want the sales price to be the price you would be willing to let it go. You'll also want to determine what you would do with the money if you did sale - pay-down your existing mortgage, buy another rental property, etc. It's a fact that a dollar today is worth more than one tomorrow so exploring all options is a strong strategic play. As a seller, there is no cost to list a property nor are you obligated to accept any offer - even a full price one. I recommend executing the listing contract with a short expiration - like 30 days - no reason to belabor the process when you have a rent option available. Then see what comes your way and choose the best route. If you find a great tenant looking for long time housing at your rental price and deposit plus renter's insurance engagement, all good. I'm a former wealth manager of a national investment firm; my most successful clients (many who are now part of my private real estate firm) explore on ROI options and also look for multiple income streams from real estate investments.

And, this: congrats on your new home and the success in building your real estate 'empire.' You've created yourself a great problem here.

Richard F. · Answer

You need to get off the fence and make a decision. The two markets, and how you should prep for them, are very different. If you prep for rent, then sell, you will leave money on the table. If you prep to sell, then change your mind and end up renting, you will have potentially spent money that you did not need to. For renting, you want to focus on more durability and minimizing maintenance, while to sell you want to focus more on cosmetic appeal, and perhaps, a "vibe".

You do not say how long you lived in the home, but I'll assume it was a number of years. In theory, you know it well, and what the maintenance issues have been over the past few years. This can indicate how soon, and how often, a Tenant might be raising issues. Also, if you have been there long enough to have "sentimental" value in it, you need to discount that regardless of which path you take.

You also do not mention the age of the home, which directly affects the maintenance trajectory.

Joel Miller · Answer

Or, you could have the best of both worlds where you sell it under a lease/option arrangement. This is where you take a LARGE down payment from someone who is given the right to buy the property for a set amount within a set time. The price you set would not be a "bargain" price for the buyer, and the rent is market rate with none of it going toward the purchase price. (This is not a "rent-to-own"...this is an option to buy.) In the meantime, the title remains with you, and the future buyer is paying you rent as a tenant. If they eventually buy, well then you sold your house for a good price, and you made good rent along the way. But only around a quarter of of tenant/optionors actually end up buying. So, when the option expires, you either sell them another option to buy later at a higher price, or they move out and you do it all over again with another tenant/optionor.

Janice Carter · Answer

Dean, I would lean toward renting it. You have got a strong interest rate, solid cash flow on paper and you already have experience managing rentals. Just make sure the tenant pool in that small town is stable and vacancy risk is low. If it rents consistently, it is a good hold but if not, taking the $24K and redeploying into a stronger location may be the better move.

Patrick O'Sullivan · Answer

It sounds like this property could be a solid keep. You’re already an experienced landlord, the mortgage rate is low, and the numbers show positive cash flow even after minor updates. With only $24K in potential net proceeds from a sale, it doesn’t seem like selling would dramatically improve your position, especially if you don’t have a clear plan for reinvesting that money.

Since the house is nearby and you know it well, holding it as a rental gives you income and keeps your options open for the future. You already have a strong portfolio, so this could be another steady cash-flowing asset without much additional risk. The main downside is ongoing management and potential maintenance, but given your experience, that seems manageable.

Unless you have a compelling reason to sell, renting it out now feels like the path that preserves long-term flexibility and value.

Joel Miller · Answer

Especially since you are already an experienced landlord, and this property is nearby, I would hold onto this one until there was a compelling reason to sell it. After all, what are you going to do with the money from the sale? Buy another property??

Caleb Brown · Answer

Seems like it's worth keeping. 24K is not bad but you are cash flowing a few hundred bucks a month and you have a cheap rate. I would guess the appreciation will remain on the lower side unless there is a development boom so if you did reinvest the 24K in a bigger city longer term you might come out further ahead. That might be something to consider. I don't think you can go wrong either way.

Todd Anderson · Answer

@Dean Klein,

Just a quick thought most of the investors that I work with talk about the regret in selling properties. Every day I hear I wish i still had that propertie. I know I have said that myself many times.

If there is a way to keep it I would.

Best of luck.

Ryan Spath · Answer

@Dean Klein

At face value this looks like a keeper to me. We would want to know a couple things before making a decision. How old are the major components? AC, roof, wiring. If you do sell can you make a better return elsewhere with the 24k? What are your long term goals? Often times if you can answer this and the said property helps you reach the goal you have your answer. Best of Luck!

Dean Klein · Answer

@Ryan Spath

Thanks Ryan. Steel Roof, and siding are 2021, furnace/AC 2018, wiring has been updated. I have about 3k worth of stuff to do to make it sell or rent ready. I've basically "retired" from buying anymore rentals. Last one I bought was back in 2021. I have 7 duplexes and a single family rental in a bigger city about 20 min from me. I have some 7.75% debt that I could pay down with the sale proceeds but I feel like 24K isn't that much really worth selling it if it could make a decent return as a rental. I could take the net rental income off the property and pay extra on my debt.

Bought new home, should I rent old one?

Bought new home, should I rent old one?

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