To Rent or to Sell - Atlanta Loft
Hi All,
I purchased a loft along the belt line in Atlanta in May 2018 for $315,000. I put $165k down and currently owe $115k on the loan @ 4.75%. I will be leaving Atlanta with my fiance for 2 years while she completes her fellowship. We *may* move back to Atlanta so I'd like to at least rent it for those two years in case we move back. If we don't move back, or choose to not live there, I'd consider renting it out indefinitely.
I've estimated my cash on cash return to be about 4-6% depending on the rent I can command on the property ($1800-$2100) and about a $500-$800 monthly cash flow.
I did a 35 year projection (3% price increase across the board for all costs) and at the end only end up with about 1.5 million in profit while a mutual fund @ 7% after tax would return almost double that amount.
My question is that after those 2 years it seems like I would be much better off selling the property and investing that money elsewhere to earn a higher return in the market (7-10%). Do I just have too much dead money (and cannot rent it for the premium I need) in it to earn a solid return?
What are the pros and cons and why would someone choose to accept a lower rate of return when their money will yield more elsewhere?