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Updated almost 7 years ago on . Most recent reply
![Rodney Sums's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/636015/1694717987-avatar-rodneys20.jpg?twic=v1/output=image/crop=825x825@0x0/cover=128x128&v=2)
An interesting "should I rent it or sell it" question
Hello, I'm new to this site and new to investing.
I'm currently attempting to rent my home in an effort to decrease spending significantly, raise capital for more real estate investments, and of course allow the current home I own to serve as an investment. Here's the facts on the property:
Appraised at 188k (SFH 2000 sq ft 2 level)
I did a refi, refinancing 146k
Mortgage with taxes and insurance about 860/mo not including 65/mo HOA
Spent about 1500 to clean, do carpets, repaint were needed
House is listed for rent at 1250 (dropped from 1275), has been on the market 19 days
paid October mortgage
Using a worksheet from a textbook I read, I'm hovering around %80/mo cash flow after icludng all costs from the mortgage, insurance, tax, property mgt, reserves etc. but with every passing day that number decreases
There are homes similar to mine now appearing on the market at the same price or lower despite being the same size or even larger.
Should I sell, take the cash and save toward another or continue holding out? I really want to rent it and even if it stays vacant long enough to just break even, I feel like it'd be worth it long term since I didn't have to fork over a large amount of cash up front being that I occupied this home. Any input greatly appreciated, thanks!
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![David Faulkner's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/278137/1694649047-avatar-sandfront.jpg?twic=v1/output=image/cover=128x128&v=2)
Originally posted by @Rodney Sums:
@Stone Jin I agree with you and certainly want to manage my properties in the future to improve cash flow. I plan to get educated in property management and laws before doing so. Thank you sir!
@Bob E. I'd like to learn more, I understand there are companies that assist with lease to own right?
@David Faulkner @Thomas S. you bring up valid points, and I hate HOAs too. My next property will not be in a planned community. What has concerned me about smaller size homes not in HOA planned communities is they are often much older in Phoenix metro. local investors reading this, please correct me if I'm wrong or missing something. Everything built now is in planned communities, which is unfortunate. As for appreciation on this home, I bout it for 150k in 2013, it appraised at 188k about two months ago (doesn't mean it will sell above or below that of course). The appreciation is what made me lean more toward keeping it for a while rather than have 40k in equity eaten up by sales transaction fees.
So most of you say sell still?
p.s. my next goal is to purchase a multiplex, occupy one unit to save on living expenses and facilitate saving for purchasing more properties. Feedback on that plan and as it relates to selling/renting my current property is also appreciated.
Thank you all for your replies!!!
You are correct that most of the smaller stuff without HOAs is in older communities, and you need to be careful to cherry pick both the neighborhood and house. These communities are established, which can be a good or a bad thing in that if they have established and stabilized as either a good neighborhood or bad one and are fairly consistent ... so be sure to pick a good one. Also, forgot to mention the other part of my "sweet spot" ... I like property built between 1978 and say, late 1990s, stucco and tile roof is great if I can get it ... these houses are old enough where they aren't all HOA controlled yet new enough where it is modern construction techniques and low maintenance. Finally, about the size, I like to be one of the smaller houses on the block ... as in a 1200-1600 SF house surrounded by mostly 1600+ SF houses. If these are track homes, that means being the smallest model in the track, usually single story where most others are 2 story and larger type of thing. Those bigger homes will tend to draw the value of your property up over time and if you ever get ambitious and want to do an addition, the neighborhood will support that.
At the other end of the extreme, I owned a smaller 1950s property in a neighborhood of similarly small 1950s homes ... I thought that it would be low maintenance because it was built like a bunker with concrete block construction, and I was wrong. Sure, structurally it was solid, but ran into major expenses from roof to water heater to plumbing to electric to sewer line ... you name it. Those type of things cost a lot to fix but don't add a lot of value. That one taught me to pay close attention to the age of the major systems and if they are at or near end of life (there are clues and tricks for inspecting these things) make sure to get an appropriate discount. My ideal property is one where some or all of these major systems behind the walls or hidden in utility closets are brand spankin' new, but all the cosmetic stuff (the easy and inexpensive stuff that you can see and adds the most value) is just awful, worn, dirty, dated, cluttered, and smelling of cat pee and cigarette smoke. If my wife hates the house, then I usually fall in love with the deal :)