Should I rent or sell?

Question

I’m looking at about $650 cash flow. $195,000 property rents for 1400.
House is completely paid off.

since I’m being relocated for work I’m leaning towards selling and buying a house cash to avoid a mortgage payment, but contemplating renting it out and taking on a mortgage at my next location out of state.

I think they are both good choices but since I have no experience in renting I am leaning towards selling.

I’m just looking for help or guidance towards this decision please.

I think they are both good choices but since I have no experience in renting I am leaning towards selling.

I’m just looking for help or guidance towards this decision please.

Christian Powell · Answer

Wow thanks everyone for your input. Very much appreciated!

The fact that it only rents for 1400 to 1500 is what made the decision so hard, I am aware of the 1 percent rule.

It would be nice to hear an argument for renting.. just to see what the perks are in that area. At this point I’ll probably just buy a decent house for cash at my next duty station and build up my savings and retirement fund.

Joe Villeneuve · Answer

Sell, sell and,...what's the word I'm looking for?....SELL.

You have $195k in dead money, with a 1 to 1 ratio of cost to you and property value.  If you sell, you can have a 1 to 5 ratio...meaning right now you have $195k in PV at a cost of $195k.  If you sell, you will have a cost of $195k...but a PV of almost $1M (minus closing costs).  If your monthly payments are half of your cash flow without debt, you could have $1625.

Don't fall in love with your properties, fall in love with your PV and cash flows.

Don't mistake your property as being your asset.  It isn't.  Your equity is, and your equity represents cash that died and went to...jail.  Get it out and back to work for you.

SELLLLLL!

Theresa Harris · Answer

How much can you borrow?  I'd sell it and use that money as a down payment for more than one rental as well as your new house.

Sai T. · Answer

I will sell if I get $1,400 for $200K

I expect minimum 1% rent of the value of the home I.e.  $2K rent for $200K