Better to Sell or Rent?

Question

It's time to make the decision to sell or rent out my condo.

I plan on relocating in the next few months and my two options are:

1. Sell

2. Rent it out (refi or heloc)

Bought Aug 2017: 128500

Renovations: 6000

Appraised in 2018: 185000

Overhead: 1350/month (Mortgage, ins, tax, HOA)

Potential Rent: 1700-1800/month

There are plans in the next few months to break ground on a new high-rise fifteen feet from the balcony of my unit which would completely block my view, a HUGE selling point for my building.

The new building next door will be a high end hotel with nice restaurants on the first floor so long-term it would be good for the area.

Ideally I would rent out my condo, pull out the equity, and buy more real estate. But given the future development right next door I'm not sure if it would be better to sell (take the money and run) or rent it out (pull out the equity to buy more real estate, cashflow a few hundred/month, and hope the building next door doesn't drop the value of my condo).

Any thoughts on the best course of action would be greatly appreciated!

Thomas S. · Answer

Plenty of factors to consider, not a home run with rent to value at only 1% but OK. Bigger question is how much dead equity do yo have in the property. Depending on how much you have it will kill your cash flow more than anything else based on it's opportunity value.

If the equity is significant you need to pull it out to invest or sell. Either way you can not allow it to sit idle.

Jonathan Soto · Answer

If you cash flow including all expenses, maintenance, cap ex and vacancy after the refi I would take cash out and rent it out and invest it on something else as well. Best of luck.

Brian Christel · Answer

Either another live-in-flip or a brrrr project.

Drew Johnson · Answer

What would you do with the money if you sold it?

Brian Christel · Answer

Great point, Thomas.

There's about 60k equity in it right now and my mortgage rate is 3.8%

I hate the thought of having that much equity tied up in it so it would be great to pull some out.

Cash-out Refi sounds good but my rate would also jump up.

- Small price to pay to have access to the equity.

But a HELOC seems like a no-brainer, just as a safety net.

Brian Christel · Answer

Thanks Jonathan.

From what I can tell, even with a refi and leaving conservative equity in the property it would still cashflow.

I still have some topics like depreciation to research.

Better to Sell or Rent?

Better to Sell or Rent?

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