Looking

for some advice. I live in a 3bed/2bath in the Biltmore area of

Phoenix, AZ w/pool. Owe 347k on the loan, 30 year, 2.875% fixed rate,

which right now is a decent position. Family and I are needing to move

back to our hometown in the midwest by June, and would like to ride out

living here until May. Due to the looming clouds of the market forecast,

not sure whether or not to sell, rent this place out (would have to pay

a PM as I would be completely hands off and out of town) or possibly

leave our furnishings and Airbnb the place. Any advice greatly

appreciated. Thanks!

What's the LTV on that $347k loan? I'm not quite sure how ‘dark' those looming clouds are in the Biltmore area especially.

It’d be tough for me to sell a property in that area unless you need the money for a house that you’re moving into.

30 years at a great rate looks good now but will only look better as the years go by.

Run the PM numbers along with other HOA or misc. expenses and see though.


Good luck though whatever you decide!

The home appraised for 440K with a waiver back in early September. Doubtful I would get that on a sale now based on comps. Current payment is $1750/mo. I don't need the money for another home, but also don't want to be super leveraged with mortgage debt in the event of a Real Estate downturn. I am thinking about contacting a few PM's to get a full scenario cost analysis of renting vs. Airbnb, but none the less, we have to leave Phoenix early June to head back to the mid west. Probably worth mentioning this would be the first time I've rented out or Airbnb a home I own. 

Well it can be intimidating with it being your first investment property. If you want to get into investments though, this could be a great opportunity for you depending on rental comps in the area.

If there is a downturn, remember that you’re renting the home. So unless you plan to sell it within a certain period of time (during a downturn) what matters is the rent covering your loan payment; Not the value of the home. 

It’s a big decision though no matter what. That is just my two cents.

@James Barnes , I'm also a local rental investor with properties in Tempe and Gilbert. For me, I'd say it definitely depends on: 1) Your Long Term Goals (i.e. do you want to hold rentals long term), and 2) Does the property cash flow? 

If the property doesn't cash flow (i.e. cover your mortgage payment, insurance, HOA, PM cost, other expenses) then I'd say it probably doesn't make sense to hold long term unless you're expecting that area to appreciate heavily in the future (i.e. future development, etc), especially since you mentioned you're moving back to the Midwest and should be able to find better cash flowing rental properties there. You do have a great long-term mortgage rate though, so as long as you're covering your primary costs mentioned above you'd still be getting the benefits of mortgage paydown over time, appreciation over the long-term (holding through the hypothetical market cycles ahead), and tax benefits.

I would recommend sitting down with a couple of potential Property Mgmt companies about potentially listing your property. They'll be able to provide you details on monthly costs, rental comps, their processes, etc to help you evaluate your decision. If you don't feel comfortable afterward regarding holding your property as a rental, then that might help you make your decision. I have a couple of PM contacts that I can share if you'd like, so feel free to message me directly if so. 

As for AirBnB, I considered it myself for a condo that I own on Tempe Town Lake. I recently decided to go with another long term tenant instead because I wanted more time to research the STR process before I dove in. There are companies that provide turnkey STR management (managing bookings, cleanings, correspondence, etc), so that may be an option to consider as well if the numbers work.

@James Barnes It's smart of you to consider all your options before deciding what to do. I agree with the gentlemen above that a lot depends on your goals. Do you want to build a real estate portfolio? Does the property cash flow as rental? Would it be a profitable Airbnb? Lots of factors.

But having been in this real estate market for 15 years, I can't see how you are not sitting on a gold mine. You are in one of the most desirable zip codes in Phoenix. You have a single-family, 3/2 with a pool. I just comped both rentals and sales in your zip code. I will put those links in a response below, but they might get nixed by the BP reviewer. If so, I can private message them to you just for reference. Since I don't know your house's features, you'll have to see which of these might be more comparable. There were no 3/2 combos when I searched for active listings, so I pulled the closest I could find.

Airbnbs can be awesome, but they must be closely managed. You can talk with STR management companies to find out their fees, which can be 30% of revenue.

To explore the cost of a long-term PM, reach out to Barbara Habbeshaw of AZ Residential Management. I have connected her to BP members who I've helped by SF homes to rent. They are pleased with the cost and convenience of her services.

We are in a very strong market that is not predicted to slow anytime soon. I was on a 90-minute market update call from one of the most respected AZ RE market analysts and our market will continue to appreciate through 2021. If it hits a headwind, it will still appreciate, just at a slower growth rate.

Here's a chart that Tina Tamboer of The Cromford Report shared with agents today. I hope you find it useful. If the numbers work and you don't need to sell, holding on to your home might be a great wealth-building move.

Melanie

@James Barnes here are those links to rental and sale comps for 85016:

Rental comps:

https://www.flexmls.com/share/4HE44/Selected

Sales comps:

https://www.flexmls.com/share/4HE6o/Selected

Melanie

Originally posted by @James Barnes :

The home appraised for 440K with a waiver back in early September. Doubtful I would get that on a sale now based on comps. Current payment is $1750/mo. I don't need the money for another home, but also don't want to be super leveraged with mortgage debt in the event of a Real Estate downturn. I am thinking about contacting a few PM's to get a full scenario cost analysis of renting vs. Airbnb, but none the less, we have to leave Phoenix early June to head back to the mid west. Probably worth mentioning this would be the first time I've rented out or Airbnb a home I own. 

Have you checked out the rents in your area? Are you able to cashflow the property by renting? Some investors I know do AirBnB by using technology (such as auto locks for the doors that allow you to use a phone app) and hire a manager, others get creative by hiring a group home manager (turning the house into a group home for greater cashflow). Personally, unless I'm selling for a 1031 exchange, I'm not selling.

Thank you for all of the great feedback!!