Primary home becoming a rental?

Question

I have lived in my home for the last 10 years until last year when my father passed. My father lived with my mother and since I did not want my mother living alone, I have moved in to my parent's home. The problem is what to do with my primary home?

I really enjoyed my home and the home is in good condition. In the back of my mind, maybe some day I would move back there. I have been debating if I should be selling or renting my home and I think I am leaning towards renting it out as real estate is such a hard thing to get especially in a competitive market as mine. One of my biggest concerns for renting the place out is the tenants will ruin my place.

I guess I can raise the safety deposit to mitigate some of that. Would you sell the property or rent it out? It would cash flow about $1K a month if I do rent it out. If renting, what other measures would you do to ensure your property is protected (yearly inspections?)

Thanks

Bill B. · Answer

If you live in the one city in he US that hasn’t appreciated immensely since your purchase you could keep it as a rental. Otherwise you’re turning hopefully $100’s of thousands of tax free income in to taxable income in one of the least landlord friendly states possible as they make the move towards even less friendly.

I assume your saying your home isn’t safe for your mom to move there instead otherwise you could sell hers instead.

Chad Hale · Answer

@Billy Kane  It is hard to get back in the bay area once you've left.  You'll have to consider that with your long term goals both financially and personally.  If going the rental route, consider joining CAA (California Apartment Association) for forms and up to date information regarding landlord/tenant laws.

Bjorn Ahlblad · Answer

Look at all the numbers objectively. Include vacancy, capex, mtce, taxes, sewer and water, mortgage. PM-even if you don't have one. In a tenant friendly area like CA don't PM this on your own if you don't have experience.

Most Bay Area homes are at least 1 million and we know that's way low. We had a rental in San Mateo that was a dump, a tear down, we sold it for 1.2 in 2016. For that to cash flow-really CF-we would have had to rent it for 10k/mo. We had no mortgage and bought the place for 160k in the 1980's. Instead we rented it for a song knowing all the money would be made on the sale not on CF. But how does one know the last 30 years will be the same as the next 30.

Read some books and watch some videos; learn how to underwrite. What you are planning to do is really sound and a great retirement move, if you do it deliberately; if you allow circumstances to take control you could wind up badly hosed. All the best!