Should I sell or rent my home ?

Question

Hello, I've lived in my house for 7 years, I am moving no matter what, I can either sell, or rent, not sure what makes sense ?

I owe $147,000

Zillow says its worth $175,000 I think more like $155,000 - $165000

House payment with insurance and taxes $1200

possible rent ? $1200 - $1500

If I sell, after paying selling fees, closing costs, down payment on next house, how much will I really make ? $0 ? that's the bad part, I then feel like I just wasted 7 years being a "homeowner" I might as well just rented for 7 years

Renting, I really like the idea of renting this house forever, once its paid off, it will be a $150,000 assett to sell , or a cash cow giving me income every month ...

either way I am moving farther up north, away from the cities, the question is how, by selling or renting ?

Account Closed · Answer

@Troy Schultz I agree with the others to sell.  Unless you need a tax write-off.

But, you would not be ahead by renting for the last 7 years.  From what I can tell, you at least got quite a few years of "free" rent.  if you get all of your money back, or even most of it vs. having just paid out rent, you definitely came out ahead by getting your "rent" money back.  It didn't make you rich, but it gave you free rent.  That's not all bad.

But, it looks like it would just cost you money as a rental, especially if you have to pay a manager.

Alexander Felice · Answer

Selling and breaking even is really your only option. The house won't cash flow so renting it isn't a realistic option.

Breaking even really isn't that bad considering it doesn't seem like you put much down on the home, and you had to live somewhere for the last 7 years no matter what. If you had rented for the last 7 years your return would have been  far less ;)

Thomas S. · Answer

This property is a very poor candidate as a income investment property as it will be negative cash flow. This will drain your personal monthly income and be a mistake.

SFH properties generally experience a 50% expense ratio over long term hold.

Rental income - expenses - debt repayment = (cash flow)

$1200 - $500 - $1200 = ($500)

Many investors rave about appreciation being key to investing but you are a very common example of why investors need cash flow. Monthly principal, interest and repairs over the life of the ownership of a personal home usually equal or surpass the end value of the property. As a investment income property you need positive cash flow to pay your personal bills, equity does not put food on the table and is only of value to those that already have more money than they need.

If you had rented instead of owned you would be farther ahead but home ownership is not a investment choice it is a life style choice.

Sell and move on.

Steve Vaughan · Answer

Any gain from the price you bought it will be tax-free at least.  I wouldn't do long-distance LL-ing, watching your grass die and screens & stuff get torn up.  Sell it and invest in your new backyard @Troy Schultz!

Troy Schultz · Answer

thanks for all the help guys, I bought it for $159,000 refinanced once, and now owe around $147,000.

If it sells for $160,000, and I pay a realtor 3% commision, I will have $4640 back ? I haven't put much money into the house, $700 for two furnace repairs, $300 for chimney reflashing, and $300 for a toilet.

I guess I was looking at it as, if I owe $147,000 today, rent it for 2 or 3 or 10 years ...

and say I break even, $0 cashflow, Then sell it in 3 years for $160,000 and say then I owe $138,000 , wouldn't I make $9,000 in those 3 years ?

But now I'm seeing where the %50 comes in, say its vacant for 3 months over 3 years, needs a plumber 3 times, furnace repair once, etc etc ...

I could have spend $7,000 in lost rent, and repairs .. . . Now I see why this is a bad idea, and why I need positive cashflow ..

Thomas S. · Answer

If he sells and walks away with nothing he has paid $1200 per month for mortgage, insurance and taxes plus any money he put into the home in repairs. Since that is what he can now rent the home for, aside from any repairs, he essentially was a renter for the 7 years.

Fred Heller · Answer

You kind of answered your own question. If the PITI is $1200 and you can rent it for $1200-$1500 it would not be a good investment opportunity. Even if you rent it for $1500, you won't actually see $300 a month cash flow after you pay for maintenance/repairs, vacancies, and property management.

Varinder Kumar · Answer

sell it! unless you can get 2000-2500 a month.

Should I sell or rent my home ?

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