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Joe Johnson
  • Austin, TX
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Rent or Sell within 2/5's rule

Joe Johnson
  • Austin, TX
Posted Apr 27 2018, 21:42

Greetings,

First post here. Just discovered the podcast and have been devouring episodes! My current situation is this: Purchased a 1450 sqft 3/2 single story cul de sac greenbelt house in Pflugerville in late '09. Paid house off in 5 years and with a new baby decided wife and I needed better schools/bigger house. Purchased new house in Davis Spring in 2015 and rented out Pf house. Has gone well, same renters for almost 3 years. Renters have decided to move on and now I am faced with a decision. A. Sell house and pay no capital gains, collect a nice return. B. Rent again. Rental rates appear to have been stagnant in my area, I rented for 1450 in 2015 and it appears I would at most get 1500 now. Calculating my ROI has been complicated because I don't know if I should use purchase price or current value. Plus I have no loan so most real estate calculators seem to assume you do, and after reading more into the business it seems most people do. My long term goal would be to replace my income with rental income. Looking for advice and/or a better way to think about how to value ROI in my situation to help in decision making process.

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