Sell or Rent our house

[Jared Virgadamo]

My wife and I are newer to BP and real estate investing. We currently own a home in Clovis, Ca which is in decent condition but has some issues. Probably the biggest issue is we have something called "skip sheeting" roofing. Basically there's no layer underneath the ceramic roof tiles. When the roof is kept clear of debris it's not a problem, but otherwise the situation has previously caused water damage to the ceiling (which has since been repaired). We are wanting to move to the Houston, Tx area and build a rental portfolio there by BRRRRing but are unsure if we should sell our house here in Ca which would give us cash or if we should rent our house here in Ca which would give us cashflow. The house is a 3/2, 1400 sqft, 8400 sqft lot, built in 1990, with a pool.

Sell: We owe $256k on the house and there are comps in the area from $380k-$410. So selling the house would give us capital to move to Houston, Tx and we would ideally purchase a house to live in with my parents and a rental property as well.

Rent: Rents for a home in our area range from $2200-$2500 and our monthly mortgage is $1450. 

We also plan to purchase an RV soon and park it at my wife's grandparents house as they are aging and need assistance. We are unsure exactly how long we will stay with them. But our hope is use the time living with them to either stockpile cash from renting our current house and saving our mortgage payment. Or if we sell the house, then we will just be ready to move to Tx when the time is right.

[Scott E.]

The numbers as a rental aren't bad for a single family house. You'd clear about $120k if you sold. You'd clear about $8400/year if you rented. That means renting would give you about a 7% return on your equity (not including principal pay down, tax benefits, and appreciation).

The biggest concern here is that roof issue you're talking about. Sounds high maintenance. And if you hold it as a rental, you'll probably need to plan to just replace that roof all together at some point, which is going to cost a lot.

Tough call. If I were in your shoes I'd sell. Especially if you've lived there 2 of the past 5 years.