Very torn on renting vs. selling in east Orlando

[Andrew M.]

Hey all, have been lurking on the forums for a while and reading about all of your RE journeys. I have no RE investing experience and my investments to date have been in equities.
I am currently torn on what to do with a home I own, as changes in personal circumstances have moved me out of Florida 1k miles away and I won't be returning in the foreseeable future. Any advice is appreciated!

Background - home was purchased in 2021 for $345,000 with 5% down at 3%. It was built in the 90's and the roof was replaced in 2018. It's a 4br/2.5ba with inground pool. Retirement is still 25 years away.

My total monthly expenses (not including maintenance) are $2500. Using the 1% rule for maintenance has be inline with the costs since I've owned the home. Various minor repairs, and a few more major ones including a pool pump replacement have kept that estimate accurate. So about $290 per month.

Now the main dilemma comes from the fact that the home has massively appreciated since I've owned it and would sell for anywhere between $525k - $575k. After sale costs this would net me $175k+ as I'll be able to take advantage of the capital gains exclusion. At today's rents that's decade(s) of net rental income even when taking into account any potential increases.

Rents however would get $3k/mo on the high end, and more realistically around $2.6k/mo. So in the best case renting is cash flow neutral (or slightly positive, like $100/mo positive) after PM fees, and -$300/mo in the worst case. So as  things stand, renting is a pure speculation play.  This is also with my current insurance rate. I haven't shopped around yet, but I imagine an umbrella policy for the pool would increase costs.

I do have a smallish home maintenance fund saved of about $20,000 so could sustain any unforseen expenses for a tiny bit. 
Any major repairs while I'm renting the house out would eat into any appreciation for the year.


I don't need to sell the house, but feel that my money could be working for me better elsewhere. In addition, the equity I have in the home represents the vast majority of my nw, so I feel like I'm not well diversified. 

I'm also not in a rush to sell, I'd be perfectly happy letting the house sit for the next 6 months to a year while we see the impacts of any potential rate cuts. 

So RE pros, and Orlando experts, what are your thoughts? I am also very new to all of this and having a hard time making an educated prediction on the market in the next 3-5 years. The idea of being a very long distance LL kind of freaks me out as well. Maybe I'm psyching myself up, but I've read about some horror stories that I wouldn't want to endure.

[John Karg]

Hi Andrew, 

There's no wrong answer and it certainly depends on your personal life situation and future goals. However, I will say that it would be a shame to get rid of a property with a 3% interest rate locked in. Even if you are cashflow neutral, at 4% appreciation the property is gaining over $20,000 in equity a year, plus the principal paydown which I imagine would be close to another $10k. If you divide that $30k annual equity gain into the $175k you would be able to pull out of the property if you sold it now, you get a ~17% annual return. That's a lot better than what the stock market will yield, so I would personally keep it unless I needed the money now. Just my two cents!

John