Worth the hassle of landlording SFH vs selling - South Tacoma

Tacoma, Washington
General Landlording & Rental Properties
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Worth the hassle of landlording SFH vs selling - South Tacoma

Noitam Otua
Member since 2024 · 8 posts · 1 vote

Hello all!

Im wondering whether the South Tacoma rental market is worth the work to become a landlord vs selling and putting the gains in the market.

Particularily, Im not hearing many success stories in the region and there seems to be a preferrence for selling (judging by the for sale signs ive been seeing recently). 


The house I have is 1800sqft, 3bd, 1.5 bth rambler on a 0.25 lot. Many upgrades were already performed to increase the valuation. And I was able to lock in a 2.99% interest rate around COVID.

Option A - Rent it

I would net +$100 every month assuming a $2650 rent after recasting my mortgage by 30k. This is low but I have another large buffer to cover maintenance and vacancies. I plan to recast it yearly by 30k to increase cash flow by $100. 

Option B - Sell it

After sale conservative numbers would be 50.2k net

(460k - 350k) - (460k x 13%)

Blocked on which scenario is appropriate for the market here...

Any property management company recommendations are greatly appreciated as well.

Thanks

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Jim Johnson
Real Estate Agent · Memphis · Member since 2026 · 595 posts · 349 votes
1mo

The $100/month wouldn't be enough by itself for me to decide this is a good rental. I'd want to know what that number looks like after realistic vacancy, repairs, CapEx, and property management since you're considering hiring one. With an 1,800 sq. ft. SFH, one HVAC replacement or a decent turnover can wipe out several years of $100/month pretty quickly. The 2.99% rate is valuable, but I'd still judge the property on what the equity is actually earning for you.

The part I'd look at hardest is putting another $30K into the mortgage every year just to gain roughly $100/month in cash flow. That's $1,200 a year of additional cash flow for another $30K tied up in the property. Before doing that repeatedly, I'd compare the return on that money with keeping it available for reserves, another investment, or the market like you're considering. The house may still be worth keeping, but I wouldn't manufacture better monthly cash flow by continually adding equity without running that calculation first.

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  • Marc Winter
    Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 3k+ votes
    1mo

    The question I'd ask is not about South Tacoma being the pivot between hold/sell; it's about the owner's desire, ability, and fortitude to continue with this rental or sell.

    No spreadsheet can take into account the multiple factors involved in either a sale or rental hold comparison, because a spreadsheet cannot predict the future; it can only provide scenarios based on what  input you provide.

    So, will the next tenant work out, or if sold, will the  closed price, minus taxes, be worth it?

    Every town and city has it's own "wrong side of the tracks", and even there you'll find examples of well performing rentals among the neglected properties.

    I'd advise to sleep on it, pray on it, and follow your gut.  

    2Reply
    • Noitam Otua
      OP
      Member since 2024 · 8 posts · 1 vote
      1mo
      Quote from @Marc Winter:

      The question I'd ask is not about South Tacoma being the pivot between hold/sell; it's about the owner's desire, ability, and fortitude to continue with this rental or sell.

      No spreadsheet can take into account the multiple factors involved in either a sale or rental hold comparison, because a spreadsheet cannot predict the future; it can only provide scenarios based on what  input you provide.

      So, will the next tenant work out, or if sold, will the  closed price, minus taxes, be worth it?

      Every town and city has it's own "wrong side of the tracks", and even there you'll find examples of well performing rentals among the neglected properties.

      I'd advise to sleep on it, pray on it, and follow your gut.  

      Great point. Thanks for sharing
      0Reply
  • Jim Johnson
    Real Estate Agent · Memphis · Member since 2026 · 595 posts · 349 votes
    1mo

    The $100/month wouldn't be enough by itself for me to decide this is a good rental. I'd want to know what that number looks like after realistic vacancy, repairs, CapEx, and property management since you're considering hiring one. With an 1,800 sq. ft. SFH, one HVAC replacement or a decent turnover can wipe out several years of $100/month pretty quickly. The 2.99% rate is valuable, but I'd still judge the property on what the equity is actually earning for you.

    The part I'd look at hardest is putting another $30K into the mortgage every year just to gain roughly $100/month in cash flow. That's $1,200 a year of additional cash flow for another $30K tied up in the property. Before doing that repeatedly, I'd compare the return on that money with keeping it available for reserves, another investment, or the market like you're considering. The house may still be worth keeping, but I wouldn't manufacture better monthly cash flow by continually adding equity without running that calculation first.

    2Reply
    • Noitam Otua
      OP
      Member since 2024 · 8 posts · 1 vote
      1w

      Very insightful analysis. Thank you!

      0Reply
  • Sean SmithBusiness Member
    Real Estate Agent · Seattle, WA · Member since 2020 · 164 posts · 106 votes
    1mo

    @Noitam Otua this is a conversation I'm having weekly with people up and down the Puget Sound region. 

    Personally, $100/mo is not nearly enough for me to consider holding a property unless there is significant future upside I see (DADU, redevelopment, etc.). 

    One maintenance issue or turnover could wipe out that $100/mo in the blink of an eye.... not to mention property tax increases, rising insurance costs, etc. Recasts also typically have a fee unless you're with a big bank.

    It comes down to this:

    Does the money you get from selling minus closing costs, broker fees, and excise tax, do more for you in another investment vehicle than it does in this real estate deal? 

    Without all the context, my gut tells me there's a higher and better use for it elsewhere unless your lot has incredible upside beyond being just a single family rental.

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    1Reply
    • Noitam Otua
      OP
      Member since 2024 · 8 posts · 1 vote
      1w

      Yes, I dont have enough knocked off yet for this not to be a stressful investment in the forseable future. Im leaning towards offloading it for that reason

      0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1mo

    Why are you only looking at the current cashflow?

    How much are rents appreciating?

    How much is the property value appreciating?

    How much will tenants be paying down your principle mortgage balance?

    All these should be taken into account.

    Biggest consideration though is it appears this has been your primary - so, you could sell it and avoid capital gains on $250k single or $500k jointly.

    So, how much in capital gains would you realize if you sold now?

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    1Reply
    • Noitam Otua
      OP
      Member since 2024 · 8 posts · 1 vote
      1w

      Precisely. Avoiding the Capital gains is another factor. I also dont see the market rents increasing substantially to make it worthwhile keeping in the next 5 years. Thanks for the input

      0Reply
  • Ali NajjarBusiness Member
    Lender · NJ · Member since 2025 · 65 posts · 28 votes
    1mo

    At only $100 a month in cash flow, I think the bigger question is whether you actually want to be a landlord for that return. The 2.99% mortgage is valuable, so I wouldn't rush to sell purely because the cash flow is low.

    I'd compare the realistic annual cash flow, expected appreciation, maintenance and vacancy against what you'd actually walk away with from selling. That should make the decision a lot clearer.

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    1Reply
    • Noitam Otua
      OP
      Member since 2024 · 8 posts · 1 vote
      1w

      Indeed. I have decided it is not a worthwhile endeavor keeping & maintaining.

      0Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    1mo

    No, it's not worth it. Did you get your business license and pay rental registration yet?

    Maybe this will change your mind.

    https://cms.tacoma.gov/OEHR/RentalHousing/Rental%20Housing%20Code%20TMC%201.95%20rev%2012.2025.pdf

    If you want to be a landlord go to a landlord friendly state like Claremore, OK, or someplace where the houses are cheaper, and the tenants aren't professionals.

    You've had the house fixed up, why destroy it? Sell when it's nice.

    1Reply
    • Jules Aton
      MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
      1mo
      Quote from @Henry T.:

      No, it's not worth it. Did you get your business license and pay rental registration yet?

      Maybe this will change your mind.

      https://cms.tacoma.gov/OEHR/RentalHousing/Rental%20Housing%20Code%20TMC%201.95%20rev%2012.2025.pdf

      If you want to be a landlord go to a landlord friendly state like Claremore, OK, or someplace where the houses are cheaper, and the tenants aren't professionals.

      You've had the house fixed up, why destroy it? Sell when it's nice.

      Agree and take advantage of the homeowner exclusion from capital gains tax.

      0Reply
    • Noitam Otua
      OP
      Member since 2024 · 8 posts · 1 vote
      1w

      Hah. Agreed bud. Cheers!

      0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    1mo

    Noitam, I’d compare this as a return-on-equity decision, not just “$100/month cash flow vs. $50K from selling.”

    If renting only leaves about $100/month after the mortgage, I'd make sure that number already includes vacancy, repairs, CapEx, insurance increases, property taxes, and management. Even if you plan to self-manage, I'd still underwrite a management expense so you know what the property really produces.

    The recast piece is worth looking at closely too. If putting another $30K into the loan only improves cash flow by about $100/month, that’s roughly $1,200 per year of additional cash flow on $30K of capital. I’d compare that return against what the same $30K could earn elsewhere rather than assuming paying down the mortgage is automatically the best use of it.

    From the tax side, I’d also compare the after-tax sale proceeds against the rental option. If this has been your primary residence and you meet the ownership-and-use requirements, Section 121 may exclude some or all of the gain. If it becomes a rental, you’d start depreciation once it’s placed in service, and that changes the tax picture when you eventually sell.

    I’d run both scenarios over a 5-year period: sell now and redeploy the equity versus rent, include realistic expenses, depreciation, principal paydown, and an eventual sale. That gives you a much better answer than looking at the first year’s $100/month alone.

    Happy to connect!

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    1Reply
    • Noitam Otua
      OP
      Member since 2024 · 8 posts · 1 vote
      1w

      Love the analysis! With it it mind, my decision is to walk away early and deploy the funds elsewhere.

      0Reply
  • John Leland
    Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 149 posts · 50 votes
    1w
    Quote from @Noitam Otua:

    Hello all!

    Im wondering whether the South Tacoma rental market is worth the work to become a landlord vs selling and putting the gains in the market.

    Particularily, Im not hearing many success stories in the region and there seems to be a preferrence for selling (judging by the for sale signs ive been seeing recently). 


    The house I have is 1800sqft, 3bd, 1.5 bth rambler on a 0.25 lot. Many upgrades were already performed to increase the valuation. And I was able to lock in a 2.99% interest rate around COVID.

    Option A - Rent it

    I would net +$100 every month assuming a $2650 rent after recasting my mortgage by 30k. This is low but I have another large buffer to cover maintenance and vacancies. I plan to recast it yearly by 30k to increase cash flow by $100. 

    Option B - Sell it

    After sale conservative numbers would be 50.2k net

    (460k - 350k) - (460k x 13%)

    Blocked on which scenario is appropriate for the market here...

    Any property management company recommendations are greatly appreciated as well.

    Thanks

    Have you taken into costs of sales ? "After sale conservative numbers would be 50.2k net"

    Before you do anything, have an agent calculate the true cost of sales and how much you would actually end up with.

    It will cost you $8,000 excise tax on a $500,000 house just to sell. They do not send you a pizza or ice cream for that. It’s pure take for the state.

    So, that is equivalent to losing $100 a month for 6 1/2 years just for the tax. It doesn't include vacancy, real estate agent’s fees or any cap ex you would spend getting the house ready.

    0Reply
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