Clearwater, FL · Member since 2016 · 2 posts · 0 votes
Hi all this is my first post on this site, I am out of Clearwater Florida and getting ready to move into a house I have purchased. My question for you all is should I sell or rent my townhouse. Details below:
I paid 185K for a 3 bedroom, 2.5 bath, 2 car garage townhouse in 2009. HOA fees 240 a month. My loan balance remaining is 150K. My tax, insurance, and mortgage is roughly 1200 a month. Adding in HOA fees will take my cost up to 1440.
I know I can sell it right now for 260K, or I could rent for approx. 1750 a month. I recognize I will gain some tax advantages but not sure how much I will save in that department. My wife and I make a combined 140K a year so we are in a fairly high tax bracket overall.
Sell it, your rent is not high enough to cover your expense costs.
Additionally you have $90 K wallowing away lying dead in a property not earning it's keep. The value of your equity alone is worth $750 per month at a opportunity value of 10%. The property itself will lose money after paying the return on equity.
You will lose money unless your rent is closer to the range of $2200 - $2400/month conditional on you being able to pull out the maximum amount of dead equity first.
My answer would depend on if the profit from selling the TH can get you something better to rent in you area for better cashflow. Also, how good your association is, sometimes they can be a pain when managing a rental. (usually more in building)
The answer to your question depends on your financial goals, plans, and risk tolerance. If I were in your position I would definitely sell the townhouse, take the tax-free profit (assuming this is your primary residence), and invest on rentals with a better cashflow. Just my two cents, others would have a different opinion.
1. my NOI and COC return 2. appreciation potential
When factoring in your returns, you must consider whether you would self manage or farm that out. You would also need to look at rental restrictions, potential CapEx expenses, rental market in those units, etc. If the returns are not very high and you can sell for a tax free profit, that might be your best option.
Sell it, your rent is not high enough to cover your expense costs.
Additionally you have $90 K wallowing away lying dead in a property not earning it's keep. The value of your equity alone is worth $750 per month at a opportunity value of 10%. The property itself will lose money after paying the return on equity.
You will lose money unless your rent is closer to the range of $2200 - $2400/month conditional on you being able to pull out the maximum amount of dead equity first.
You will lose your homestead exemption for the townhouse which will eat away more of your rental cash flow . If it were me I would sell and invest your $110K potential profits into a flip or 2 new rentals ,rather than a potential $3600 in annual rental profits . If you haven't done any flips then give us a shout . We partners with people throughout the Tampa Bay Area on a regular basis . You need to get your money working harder for you than you do
Thanks all appreciate the feedback, I really want to get into the rental business and its tough here in Clearwater Florida right now with prices so high.
I would sell it. You avoid the capital gain tax because you lived in it since 2009. Take the equity from it and split it into buying something else for myself and another rental. Also, once you rent something you lose the homestead exemption so your taxes will be higher.
@Jonathan Bell, Hello from Tampa. I give up...is this the blind leading the blind? You SELL Tax-Free with the Residental Tax Rule because you lived there for 2 years out of the last 5. You are allowed up to $250K Tax-Free on the Sale of your Residence, per person. Take your Profit and pay off All your Debts and Invest the rest in your new Home and just do it again. For the love of Money...Does no one know how to Work Smart and not Hard? I give up. Seen enough of BP and all the Pros.