Should I sell or rent my house? Thanks!

Question

Ok so here are numbers. Feel like I should sell but want to make it work. My argument would be with a smaller loan balance I might lose a couple hundred a month for a few years until mortgage is paid off. Once the house is fully paid cash flow would be great! Let me know your thoughts. Thanks!

3 bed/2.5 bath 1900 sq ft home in desirable Richmond va neighborhood

$525000- current value

$362000- purchase price in 2009

$70k- left on 15 yr mortgage at 3.25%

$2400- monthly mortgage including tax and insurance

$2700- estimated rent

8%- estimated mgt fee

Probabaly will need new ac unit in next year or two. Estimated about $8-10k. No other big cap x items in near future.

Wes S. · Answer

@Rob MacSwan I think you should sell. EVERY house cash flows great once the mortgage is paid off. In the meantime, you're eating a few hundred a month before you calculate the big capital expenses (roof, AC, etc).

So, you've got probably above $200K in equity, and you've been living there since 2009. Which means if you sell, the increase in value is completely tax free (up to $250K, the change in price). So then you have that $200K+ plus to use on an investment property that ACTUALLY cash flows today.

Account Closed · Answer

After 3 years? Nothing happens. Thats the beauty of a paid for house!

Account Closed · Answer

I would keep it. Dont listen to the crowd that pulls out of high growth high appreciation markets and chases mythical cash flow in cheap dying cities. You will have a fully paid of asset in 3 years. You will get a guaranteed income check out of there. If the crap hits the fan you can go live there in a fully paid for house in a good neighborhood. And over the long haul the DC market will probably continue to grow your equity. If you sell, you will not easily get back into those markets.

Will C. · Answer

@Rob MacSwan its all depends on what your goals are. Do you think you might move back into this property one day and can you afford to cover the loss each month until then, then keep it. Are you actively investing in RE or starting? Then you may find better returns in multiple properties that are suited better as rentals or multifam.

500K+ sitting in a home is alot of idle equity, also many eggs in one basket. You have been very fortunate with your appreciation thus far but it is not certain that this growth will continue. Most consider betting on appreciation is speculation not investing. Off the cuff calculation i bet you would be getting a 5% return, that money in a fund should yield more.

Adrian Stamer · Answer

I’d say definitely sell except for one tricky detail... hard to find inventory to buy these days so you might be sitting on that cash for a while.

Daniel Harnsberger · Answer

Although I can think a great realtor to list it for you (me!), I highly recommend the previously referenced strategy, use your equity and purchase some investment properties using the BRRRR method!

Wes S. · Answer

@Rob MacSwan if you're that close to paying it off, your equity is amazing. So you're probably looking at $400K you could use for an investment. Or more correctly, multiple investments or a multifamily.

Here's what you could do with $400K instead. Buy a place for cash from a wholesaler/auction for a bargain price then get a mortgage to pull most of it out. You could probably do that at least twice depending on the market. You could potentially have the cash flow you want in a year or two spread out over multiple properties.  Because what you need to consider is vacancy -- what happens of your current current home goes two months without a tenant?

Rob MacSwan · Answer

It’s my primary home and there is a good chance I am moving. I know you guys are probably right but the thought of owning a $500k+ house free and clear in about 3 years then getting $2700 a month sounds enticing.

Should I sell or rent my house? Thanks!

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