Rent vs Sell

[Stewart Harsant]

I currently live in Lakewood, CO in my 5br 2ba ranch style house bought in 2020 at 3% mortgage rate. My PITI is $2,207 I will be moving out of state in a 1-2 year timeline and am debating whether to sell this house or to keep it as a rental property. I do not need the sales proceeds for a future down payment. This would be my first investment property. I would like want to use a PM. I used the BP Rent vs Sell tool and could hypothetically cash flow around $100 per month using a PM. For the experienced investor, ideally with knowledge of the Denver market, what would you do in my position?

[Juan Pablo Murillo]

That's a fantastic position to be in. Most investors would love to be holding a property with a 3% rate in a market like Denver.

My advice comes down to this: a 3% mortgage rate is an asset you can't replace. Today's rates are around 6-7% for a 30-year loan, which makes a cash-flowing property in a major metro area like Denver an incredibly rare find. Based on my data analysis, cash flow can be extremely difficult to achieve in Denver at today's prices and rates, making your situation quite desirable.

If you want to be an investor, my personal advice is to keep it. Here's how I'd approach it:

1. Focus on the PM search: Spend your time and effort on vetting and interviewing property managers now. That's the key to making a successful out-of-state investment work.
2. Create a detailed property document: While you're still living there, document everything. Take photos of the electrical panel, water heater, and all appliance serial numbers. Note the paint colors, flooring types, and where the main water shut-off is. Having this document will be super valuable for both your memory and your PM.

If, on the other hand, you know you don't want to be a real estate investor, you could sell now. Just be aware of the tax implications. You won't pay capital gains tax on the first $250k (if single) or $500k (if married) of profit, as long as you've lived in the house for at least two of the last five years. I'm not a CPA, so definitely talk to a professional about your specific tax situation.

From my own experience with out-of-state rentals, I would personally keep it. I actually prefer to have properties I don't see regularly—it forces me to view them as a pure business and investment, with no emotional attachment. Best of luck!