Maybe you can help us accidental landlords with deciding what to do with our home in Denver?
We own a home in Denver, it's a SFH flip in the North Park Hill neighborhood (between Monaco and Quebec on 26th). Current mortgage left: 300k at 4.5%
We relocated to WA last year and rented the house. Here are the relevant monthly numbers:
mortgage, taxes, insurance: $1,950
Water utilities: ~$50
Landscaping: $120 in summer months
Property management: $197.50
Rent: $2235 (includes monthly water charge)
The house is currently estimated between 450-510 depending on the site. It's currently rented out.
Since we aren't investors we don't know how to properly analyze this property or even where to start. So we were hoping someone here can chime in and help us figure out whether we:
1. Keep the house as a rental (would like to increase rent next year) knowing that we'll be moving from primary residence to rental property as far as taxes when we sell it later.
2. Sell it. We will not be able to buy a house in WA since RE is too expensive here anyway. We'd either pay my student loans or try to re-invest in the stock market?
I realize nobody knows the future, I'm mostly looking for information on how to analyze this from an "investment" perspective (rather than a primary residence perspective).
Any help will be appreciated! Any follow up questions, feel free to ask!
@Maor Leger an important question in this: how long did you live in the house before you moved? The tax implications may answer that question for you.
@Maor Leger also, if it would be helpful in your analysis, I am more than happy to run a full market analysis on the property to give you a solid idea of the value.
Ah yes we lived in the house 4.5 years before moving out 1 year ago exactly
@Maor Leger Talk to your accountant. Because you only moved out a year ago, if you sell it now vs hold onto it for another 5 years, the tax implications are very different with respect to capital gains. Looking at your numbers, you aren't factoring in the cost of repairs and vacancies meaning you are likely going to be paying a little bit of money every month to keep the house.
@Maor Leger generally speaking in CO, if you’ve lived in a property for two of of the last five years, you can avoid capital gains. However, like Teresa said, you’ll want to check with your accountant, especially since you live in a different state. Washington state may have different rules.
I sent you a DM. Love to chat with you more about the math; it’s a question I answer for my clients weekly. :)
Looks like my property that I'm considering selling (5bd near Westminster) except with much higher expenses!
You haven't included capex, maintenance, or vacancy and it's already negative cashflow. Based on these numbers I'd guess you are somewhere around $250-400 in negative cashflow a month. Given that you also lived there for more than two out of 5 years you should be able to sell it without paying federal capital gains.
Seems like a clear sell to me but that's just my opinion.
If you need a referral to an agent I have one that I'd highly recommend. If you want a "pro forma" i.e. fancy spreadsheet to analyze the cashflow of your property PM me and I can share the template I use for analyzing properties.
1031 upgrade and defer it so you can get another house
If your situation allows that.
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