Should we rent our sell our house?

Question

Hello!

My husband and I will be moving from Florida to Ohio next year. When we move, we are completely torn on whether or not we should rent or sell our house. I'm looking for some unbiased opinions from people that I don't know and aren't close to us. We've heard so many opinions from our friends and family. :) So here is our story...

We recently refinanced our home and our mortgage is approximately ~$780/mo. In the area of Jacksonville we live in, we see rentals that are comparable to our house renting for ~$1500/mo. When we refinanced our house it appraised at $80k more than what we originally purchased it for 5 years ago and ~$100k more than what we actually owe on our mortgage. So both situations, we would make money.

So this is where we go back-and-forth:

• We're ok with hiring a property manager, but we're still concerned about being 700+ miles away 
• If we sold, we'd have a bigger down payment for our next house which means a nicer house in a better school district 
• We have two kids in daycare and my husband is in CRNA school so saving money for the next house is a challenge right now since we're living off my income & basically student loans 
• When it's time to buy our next house my husband will be done with CRNA school and I'll only have one child in daycare, so the disposable monthly income will be more

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We want to get into rental properties.. we really do! That is our future investment plan for our retirement and to ensure our girls are taken care of. What I don't know, is if this is the house that we should use to launch that dream. I am fully aware of the potential income we could make over the long-term. We're also believers in selling high and buying low, so if the market continues to hold steady next year we would be in that situation. We're just really torn on what we should do...

Thanks!

Kristi

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Remington Lyman · Answer

Keep the property then house hack a 4 unit on an FHA loan in Ohio. Where are you move to in Ohio?

Brandon Sturgill · Answer

@Kristi Marie Meyer personally, the biggest regret in my life is selling a property...there needs to be a wildly intense situation for you to sell and trade your future equity. This is a long-term gain and selling is not the way to create wealth.

What is the rate of appreciation in your neighborhood...even if it's low, the combination of debt paydown and equity build will result in huge equity...if you want to sell, do it in 15-years when the price of the property is double what it is now....

Grace Wang · Answer

@Kristi Marie Meyer That's definitely a tough situation! The way I look at it is if you're going to stress over money without the help of the sale of your current home, then you should sell. Let's say you don't sell your home. Will you guys have enough income to take care of daycare costs and other living expenses? Will the lack of sale proceeds put any unnecessary stress on you and your husbands relationship?  If not selling your house jeopardizes relationships and well being, then you should sell it instead :)

Have you explored the possibilities of house hacking and putting low % down on a property in Ohio? Would it be possible to find a duplex or a SFR with a mother-in-law suite to help offset your housing costs? if you house hacked, you not only get to save on down payment, but you also get to save (and ideally cashflow) on living expenses. Live in that property for one year, move out, rent it, then do it again!

If your family is willing to delay the nice house by a couple of years, you could take advantage of the move by starting to get some rental properties under your belt.

I see both pros & cons of selling & not selling. I'm sure that either route you go, you guys will be okay :)

Bonnie Low · Answer

This is what I would do, but of course we all have different needs, risk tolerance, goals, etc. It sounds like you're interested in getting into rentals for your future, so why not start now with a property you already own? Yes, you'd be 700 miles away, but find a good property management company and let them handle it for you. It also sounds like you potentially have enough equity in the home to do a cash out refi or even a HELOC and still be able to cash flow the property given how high rents are compared to what you would owe if you pulled out some cash to use either for a down payment on your new place or for rental purchases in your new area. Since you're moving so far away, you might want to look for a temporary place. Try out the neighborhood, schools, etc rather than buying that bigger, nicer home right from the start. You can rent for a while or buy something you can house hack for a couple of years then turn that property into a rental when you find the place you truly want to settle down in. You'll still have your FL home that will be cash flowing, having the mortgage paid down and probably continuing to appreciate so you can sell it later if long distance landloring isn't for you. Just my 2 cents.

Brandon Sturgill · Answer

@Remington Lyman we gotta get your votes over 3,000 man, lol. you've been busy

Account Closed · Answer

Sell the house if you are not going back to Florida. When you own a property 700 miles away you lose a ton of money when you have to pay a property management company and when you are not hands-on to manage the property. Your management costs are usually more than 10% when you add the additional costs for re-renting, advertising and for handling maintenance issues.

If you sell the house it should be very easy to purchase a comparable property, or much better in Ohio and it is my understanding that real estate in Ohio is currently appreciating like crazy. If you don't sell and wait to buy in Ohio, later, then you will most-likely wish you had sold when prices were lower and you will wish you had sold so you could own a property close to vs. 700 miles away as you are trying to figure out why your tenants are running a dog kennel inside your home, they have not paid their rent for several months and your property manager tells you that you need to send a few thousand dollars to cover the attorney fees and other bills that are past-due.

I sold almost all my out-of-state properties and it cost me $8,000 to $18,000 to clean and paint every home to prepare them to be sold. Just this past week, I went to Las Vegas from Los Angeles and spent $8,000 cleaning and painting a small 1300 sq ft 3 bedroom home and that was my cost not including my 4 days of very hard labor. The carpets were $3500. I spend about $2,000 for paint, blinds, faucets, door locks and all the other essentials. It cost $300 for a trash bin, 4 days for three laborers was about $1800, about $400 for gasoline for 2 vehicles and food for everyone. I'm old, but I do twice the amount of work as any of my workers do and if you add in my cost then add no less than $300 per day making the total cost $9200.

We own several properties within 8 miles of where we live and because we are hands-on and have the ability to screen our tenants, personally, and because we visit our properties almost every day we never had a tenant destroy a property the way every long-distance property we ever owned was destroyed. We cleaned a small 3-bedroom house in Boise idaho two years ago and the cost without my labor was $18,000 and it took three trips to Idaho from Los Angeles and a total of 11 work days to do the work. Even if you lose a little money by selling, at first, you will make up that amount of money in a very short time by not having to pay a property manager and by being hands-on.

Do the math for your choices and then stretch the numbers out 5, 10 and 20 years with calculations that show all your cost, how much you will save, etc.

Remington Lyman · Answer

Get busy working or get busy dying. https://gph.is/g/ZPJNo6B

Ken Naim · Answer

@Kristi Marie Meyer @kristi in my opinion sell the house. It was never intended as a rental, you have a lot going on right now, husband in school, kids in day care, move, personal home purchase. The last thing you need is the learning curve of real estate and the risk of a bad tenant, property managet or economic cycle.

Save the extra money, don't buy the bigger, better house, and when your husband is working and one kid is out of daycare the focus on real estate. Then you can choose if you want to be local or remote investors.

I'm a real estate investor for 25 years, and now have 2 kids, 3 and almost 2. It isn't easy even with experience, so while I typically advise to get started ASAP, in this case waiting could be the better option.

Bradley Dosch · Answer

I vote keep it as a rental. Those are solid cash flow numbers you gave, you have a healthy amount of equity in it and the home will continue to appreciate. One mistake I made when I did this same thing was that I didn't open up a HELOC when it was my primary residence. A HELOC on your primary residence will give you access to more capital bc of the higher LTV. I didn't do this and the LTV on an investment HELOC is much lower and much harder to find. Having a HELOC on a primary residence ready to deploy is pretty powerful

Caleb Brown · Answer

I'd hold it. You could refi pull some money for DP and school. The Florida market has been on fire and people are moving there like crazy. PM would be able to do a good job and keep it rented. While you are there you can vent and interview PM's. If you can weather through the move and schooling you'd be in a good spot 3-4 years down the road. Cash flow looks like it'd do well, run numbers to verify.

Should we rent our sell our house?

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