[USER]

Needing some advice on our home. Continue to rent it out or sell?

We bought out home in 2021 with a 2.9% interest rate for $185,000.

We owe $165,000 on it still. The home is currently worth $225,000.

We ended up moving out of state a few months ago and my brother is currently renting our house from us.

Current rental market says it’s worth about $2,000 a month, though we’re charging my brother only $1600.

Since we aren’t having to use a property manager since we live so far away, I trust my brother to take care of it.

Now my brother is considering a move out of state as well after the lease is up.

My husband and I are trying to decide if we should

A: Continue to rent the home out and use it as an investment property.

If we add the profit from renting to our mortgage payment we will pay the house off in 15 years instead of 30 years.

B: sell the home and use the profit to buy a home in our new state since we are currently renting in our new state.

We’re young and don’t really know how this all works

[Carol]

Is there any chance you will move back? If there is keep the house. You’ll never see those interest rates again.

If you can qualify for a house without selling it, I would keep it as an investment.

You will never beat it as an investment.

[Anna]

Licensed Realtor here with 20 years experience in rentals and property manager
Sell

These days the average cost (no matter the area) to replace a tenant (and most don’t even tell you when repairs are needed till the inconvenience the tenant) is anywhere from $10,000 to $25,000
Tenant placement fee probably 1 month rent, management over a year probably (estimated) 1 months rent or more

Mortgage while house is vacant at least 30 days, can be 60 or 90 depending on the time of year

(now up to at least 3 months equal to mortgage payments)

Paint job, depending on size $3000 to $8000 some repairs, maybe new carpet ( go laminate instead)

Heating and cooling during those vacant times
Vacancy insurance

Landlords have no rights

Section 8 tenants have state provided attorneys
So do other low income programs

Lots of tenants have become professionals in collecting from

The government g sponsored help programs

Yet you wait for 5/6 months on an answer and get a no most of the time

I’ve seen landlords try to evict the same tenant 24 x because the courts made it so difficult

[Helen]

Having owned residential rental property, I would sell and use the profit to purchase IF I found a decent buy; current interest rates in our area are near 6%.

Might invest your profit for the current time.

A property manager is an expense.

We have found commercial real estate is a much better investment.

We’ve had the same renters for 10+ years; they take care of the property as far as mowing yard, interior and exteriors are clean, neat.

After all, the appearance reflects on their business; great renters.

Will never have residential rentals again.

[Marjorie]

I would definitely sell right now if you’re going to make a large profit.

Renting is a hassle and now if there are issues with renters you will pay a lot for a lawyer and a long time to get them out and they will trash your home when finally leaving.

I’ve seen this over and over, and some states have “squatters right”, which is insane

[Linda]

Realtor here – if it were me I’d keep it. Interest rates are high rn and if you bought it in 2017, you probably have a low interest rate.

Yes, I would use a property manager, but the property manager should be charging you no more than 10% of the rent.

Have them find you a new tenant that use some very strict screening requirements.

Make sure that person has at least two years of no late or rental payments a good credit score and a couple of years at their job.

If the average rent would be $2000 and definitely charge that you’ll still have $1800 which is more than what you’re making with your brother renting the house.

But I would put some of that away in case there are damages.

Let the house gain some equity.

Wait until it’s a sellers market, and then sell it by then you will have gained a lot of equity.

But you can still use the house to get into a new house where you are . You won’t qualify for FHA since you already own a home.

But if your credit is good, you would qualify for a 3% conventional loan.

You can do an equity loan on the house you currently own.

And the additional rent that you’re getting from the Renter would pay off the equity loan plus pay your mortgage.

Then you use the money that you borrowed to get into your new house.

You will want to have that money in an account and have it sit there for two months.

(seasoning) before you use it to qualify for your new mortgage.

[Katheryn]

Keep this in mind – if you keep the house you are responsible for all expensive repairs, which negates at least some of the profit you think you are making from it

[Scott]

Depends on the price of your new house and the interest rates on the remaining.

Also depends on your states tenant laws.

Don’t want to end up with a.

Squatter or non paying renter

[Annette]

I had a rental for 18 years. It was nothing but hassle and made me little money during that time.

I sold it last year, made a decent profit, tossed most of that profit in the market, and am making more money, but without the headaches.

Sell the one your brother is in and buy one of your own.

[Amy]

If you’re not near by, SELL IT. Your next tenant could cause more damage than it would be worth.

Don’t take the risk.

[Theresa]

Realty Companies will manage your property for a fee. Since you are so far from the home, and seem to want to keep it, check into it.

They will collect rent, inspect frequently, vett prospective renters and

It will protect your property.

Try it for a year and see how it goes.

[Susan]

At that interest rate keep the house and pay it off faster to get more equity in the home and maybe sell it down the road.

House prices are only going up.

[Holly]

What are the landlord/tenant laws like in your state? More favorable to landlords or to tenants?

Maybe talk with a great local real estate agent and pick their brain.

[Kellie]

I own a rental. If you choose to keep and rent it out make sure you have a cash flow available for big ticket items that might come up.

Think hvac, roof, plumbing.

A landlord policy for insurance runs twice what your usual homeowners policy does and I also hold an extra umbrella policy to cover my personal assets.

You will also be paying income taxes.

That being said, there is money to be made in the right markets.

[Lisa]

Have you lived in the house 2 of the past 5 years so you get the capital gains exclusion?

If so, I would sell it and look for a new house where you are at.

[Sunshine]

3% interest and you can charge more than you are in rent? Unless you are sure you won’t move again in the next 8 years I would keep renting the house and continue to rent where you are.

[Melissa]

We were in the same position, years ago. We did not live near the home we were renting out.

It was a disaster.

We had to get the Sheriff to remove them.

The property inside and outside was very damaged.

Never again will we get into the rental business.

[Kate]

I bought my house then moved to a different country. Several times I thought I would have to sell. So glad I didn’t.

Not only do I have a passive income but but house is worth around 3x what it was.

I bought for 55000 & had it value in April for 300000+.

[Joy]

If you rent it out to a stranger, use a rental manager that has a very good and detailed lease

[Trina]

If I could find a renter that I knew like your brother..I’d rent..but really risky if not…

Interest so high now that would be nice if could sell for overage profit and not have so much cost on new house.

[Stephanie]

As a retired realtor, if the house pays for itself, never sell it. If you are young, you don’t know where you are going to “settle“ and every time you buy and sell a house, you lose a lot of money in realtor fees and closing costs, so factor that in.

One of my biggest regrets is not holding on to my properties.

Good luck with your decision.

[Annette]

Sell. You never know what kind of renter you’ll get and you aren’t close by to keep an eye on the property.

[Elizabeth]

Our exact situation about 30 years ago. We owned a house in South Carolina that we leased when we moved to California for the military.

We could not afford to buy in CA.

The house in SC needed a new roof, the renters were always late with the rent, it was a nightmare even though our nephew helped us manage it.

The best day was the day we sold it. What a headache.

[Merissa]

I think it mostly depends on what your tenant laws are and how the housing market is going in both states.

If you own the home in a state like CA I would 100% sell because the tenant laws are ridiculous.

[Teresa]

No way would I rent it out now. We live in an area that have changed all the rules and the tenants can do anything they want and the landlords have no say over their own homes.

Once my tenants leave in February….

I’m done.

Sell, take my profit and spend it elsewhere.

[Author]

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