Sell vs. Rent House

5 Replies

Hello,

I'm new to the site and thought I'd come out asking for insight in a current decision I am in the process of making. 

I own 2 homes in Canton, Baltimore City and will be living in the one I just bought. I first purchased in 2018 for 315k and have about 260k still owed on the mortgage. Looking at comps I think I would be able to get 325-330 if I sold this spring/summer. I wouldn't walk away with much more than I put down closing in 2018.. but the values in Canton have been very stagnant the past 10 years compared to the suburban areas in MD and I worry about the future, especially the risk of owning 2 homes in the city. This seems like the time to sell if you're going to sell. 

That being said, I could rent the house fairly easily to cover the mortgage and a little extra and don't mind the extra hassle. My biggest concern is the future of Baltimore City and the housing values in Canton.. tied with the fact that they are over 100 year old row homes, although both in good shape/renovated over the years. The 2nd concern is I have both dice on one neighborhood in Baltimore City and if things go down the chute they will together. Unlike the confidence I have in home value growth, I do have confidence there will be a strong rental market for years to come due to the prime location by Hopkins and many other hospitals/companies. 

I appreciate any insight / experiences shared. 

Sounds like very valid concerns. It sounds like you aren't planning to continue investing where you live past this one property? Since you already live in the area and are comfortable with the potential rental income, why not hold that property and work towards a 2nd investment property outside of the Baltimore area? I've always liked the idea of having 1 rental property in my current neighborhood to keep tabs on the market, easy to self-manage, and stay cash-flowing while providing housing in my area. All other efforts could go towards that next opportunity to diversify. 

How about refi to a 15 year while rates are good if possible and keep it renting it.  You could rent by the room and get good tenants as well if you have 3 or 4 rooms.  You might be able to borrow hard money for a chap reno and spike your appraisal so your could keep less in the deal on a refi  or flip it.  Anyway you cut it you go to sell later you will have a bunch of equity.  Look at an amortization table and see what happens to your principal 5 or 10 years after a refi into a 15 yr.

I really doubt Canton will go down hill.  Usually the people that get slammed are the ones purchasing on the frindge like just north of patterson park.  If things go backwards and its only a block away thats much more of a risk.  They are still building and renovating in Canton.  I would say atleast average appreciation relative to the country.

Like was said self managing could be easy.

If you need further explanation I can pm you.

Originally posted by @Ian Bollinger :

Hello,

I'm new to the site and thought I'd come out asking for insight in a current decision I am in the process of making. 

I own 2 homes in Canton, Baltimore City and will be living in the one I just bought. I first purchased in 2018 for 315k and have about 260k still owed on the mortgage. Looking at comps I think I would be able to get 325-330 if I sold this spring/summer. I wouldn't walk away with much more than I put down closing in 2018.. but the values in Canton have been very stagnant the past 10 years compared to the suburban areas in MD and I worry about the future, especially the risk of owning 2 homes in the city. This seems like the time to sell if you're going to sell. 

That being said, I could rent the house fairly easily to cover the mortgage and a little extra and don't mind the extra hassle. My biggest concern is the future of Baltimore City and the housing values in Canton.. tied with the fact that they are over 100 year old row homes, although both in good shape/renovated over the years. The 2nd concern is I have both dice on one neighborhood in Baltimore City and if things go down the chute they will together. Unlike the confidence I have in home value growth, I do have confidence there will be a strong rental market for years to come due to the prime location by Hopkins and many other hospitals/companies. 

I appreciate any insight / experiences shared. 

You are in a good company Ian!

 

Hi Ian,

Buying at 315K and selling at 325K, you will be losing money after you pay commissions, transfer and recordation taxes etc... make sure how much you end up with.

 You can always rent canton houses regardless of the housing market, and Baltimore is a strong rental market now and it will be for many more years.

If you can get at least $3150, I would keep them, if you cannot make that then it will be a pain years to come, so will take my loses and move onto another one.

I agree 100% with your market assessment - the resale market in Canton has stagnated over the past 2 years but the rental market remains strong. I also share your concerns about the future of the Baltimore City resale market, but obviously no one can predict the future.

One thing to consider in making your decision is Capital Gains taxes. You should be able to sell your owner occupied property tax-free, but what about the other one? You may consider holding onto that in, at least until you can sell in a 1031 exchange. Perhaps you consider selling your owner occupied property and diversifying into the county, while holding on to the investment property and reassessing in a couple years?

Good luck, and let me know if you'd like any insight on market comps, etc.

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