Rent it out or sell it?

Question

Hello, I have a vacant condo in kissimmee about 10 minutes from disneyworld. It's worth 200k and i owe 60k. 6 months ago i moved out, now i wonder if i should sell it or rent it out? The price increased from 150k to 200k in the last 6 months. I am just done remodeling it. I wonder if it is smater to sell now (that prices are high) or to rent it out. If i rent it out i could get $1600 for rent (minus $250 HOA, $ 220 interest, minutes $250 for repairs) and about $880 after all costs before tax. Is it worth keeping it out should i sell it. Thank you.

Josef Kurzmann · Answer

I probably would put the cash on my bank account and maybe buy some high quality corporal bonds (high equity to liability ratio like apple). If the stockmarkt or housing market crashes i would put it in there.

i would manage it myself. The HOA allows short and long term rentals.

I don't know about short term but in the long run it should appreciate. The value is at $145/sqft. It's on 192 (if you know thae street from a vacation in orlando). I don't care to deal with tenants as long as i have some that pay and take good care of the property (i know things break, so as long as they don't purposely break things its ok). I've a pretty good handyman with 10 years experiance that charges only $30 per hour and i can do small jobs myself. We just put new floor into the kitchen and bathrooms, new vanity sets and cabinets, also the kitchen appliences are 6 months old...

i just wonder if prices could decline because it is an absolute hot sellers market right now... If they would stay the same i probably would prefer to rent it out as is and if it turns out to be a "good thing" for us i could refinance it and take some of that money as a downpayment for a second rental.

Evan Polaski · Answer

@Josef Kurzmann - if you sell what would you do with equity?  You are forgetting real estate taxes in your cash flow, but assuming you are still cash flowing $500+ per month.  Are you planning on leasing and managing the condo yourself?  Are you allowed to rent out your condo per the HOA?

And you might actually have 3 options: hold as is and rent, sell (and hopefully reinvest the proceeds) or refi.  The decision is going to based on you.  Renting as it sits will yield the highest monthly cash flow (depending on rate on your mortgage).  Selling, from a financial perspective, only makes sense if you can reinvest the money at a higher yield.  Refi and rent will allow you access to some capital (and only makes sense if you can reinvest it) while also getting some monthly cash flow.

Other factors: do you think the property will continue to appreciate, and at what rate?  Do you want to be landlord dealing with tenants, damage to the property, ongoing maintenance?  And as noted above, are you even allowed to rent your property?