Sell or Rent Primary Residence?

Question

I'm obviously going to have my own emotions attached to the decision, so I'd like to ask what others would do if you're in a similar situation. My wife and I have both recently changed jobs, and where we currently live just doesn't make any sense (45+ minute commute each way for both of us). Our house is in Spring, Tx and with the growth that's been going on in Houston, I really think the long term housing market is pretty solid.

Monthly Expenses:

Mortgage Payment - $1,042.85 (Includes P&I, Insurance, and Taxes)

HOA Dues - $45

Repairs/Maintenance - $257 (Roof, HVAC, and Water Heater are from 2016 - plumbing is all galvanized)

Property Management - $160

Total Expenses - $1,504.85

Estimated Rent - $1,600

It's a pretty thin estimated monthly margin of $95. But one of the main positives, is that the rate on the loan is at 3.625%. If you factor in principal payments in the equation, I'd be looking at $338/mo as of right now.

On the flip side, I'm pretty sure on a conservative estimate, we could sell our home at 175k, possibly as much 185k. After closing, I'm not sure we'd be doing much more than breaking even.

We are in a decent enough financial position so that we don't have to sell the house to put down a solid down payment for the next house. I'm sure I've left out some details so please let me know else is missing from consideration!

Chad Trail · Answer

I’m in Spring and debating the same thing. I could probably make around $300/mo renting my house, plus more depreciation to claim. I too have a low 3.625% mortgage, hard to give up that cheap of money.

Isstad Rashadeem · Answer

@Kevin Coggins @Chad Trail I also invest and live in Spring. There are a few possibilities that may benefit you depending on what your overall goal is. We could meet up and talk about some of the things we did, we do, and are considering.

PJ Singh · Answer

@Kevin Coggins , I was also in similar situation with similar house 5 years ago. I decided to rent it instead of selling it. This was first rental property which I managed myself. I learned a lot and build my confidence to grow further in REI. IMHO, if your starting out, I would rent it and try to self manage it. If it doesn't work , always turn to PM or worst case sell it. Your have very low interest rate, Spring is going to get better (Exxon HQ), you have new AC and water heater (major capex ) set for another 10 yr. I would suggest to read rental property books ( like Brandon Turner's or any other one). It will give you all details and system in place. In realty your cash flow would be slightly higher as you capex reserve will be low. Before you rent it, get a HELOC on equity. It lot easier to get on primary residence in Texas. Contact me if you have any questions, Goodluck in REI journey!

Kevin Coggins · Answer

I just meant as far as whether I buy or sell it and the way I'm thinking about it and looking at the numbers. Sometimes when your in the situation its hard to take a step back and analyze adequately. I have no emotional attachment to the house at all, we've lived in it just under 2 years.I think either option could work out for me in the long term

Christopher Giannino · Answer

@Kevin CogginsI don't know your market so I'm not going to say whether you should keep or not but I just want to bring up something you might not have thought of.. Your first line of the post states, "I'm obviously going to have my own emotions attached to the decision" so my question to you is, how would you feel if a tenant you're renting to destroys the house? Obviously, every investor would be upset and pissed off but would it eat at you even more being that you used to live there and maybe even did a project or two in the house yourself? My point is maybe it will hit too close to home that the potential stress it would cause is more heartache than what it's worth. Remember investments aren't supposed to be made by emotions. Best of luck!

Kevin Coggins · Answer

Is that $300 including principal pay down? Also, we would be self manage the property, so the cash flow would be a little better. I think we'd be okay doing either too though.

Kevin Coggins · Answer

Before closing costs we'd probably be at about 50k in equity. I don't remember if it's October or November, but pretty soon we'll be hitting year 2 of the homestead to get our capital gains tax free.

Mitchell Benson · Answer

if you have any equity at all I would sell it. The question to ask is....if you didn’t own the home, would you buy it as a rental with the same numbers you provided?No.Don’t be forced to keep your bad investment rental house. You don’t want that risk. Besides, 1 vacant month will take out all your cash flow for the year