Rent or sell? Roseville California

[Kristine Lynch]

Looking for as much feedback as possible. We currently own a 3/2 single family in Roseville CA and always had the intent of renting it out when we decided to move. For the past 4 years we have been house hacking and renting out the other bedrooms. Now we have the option to move out into another house and rent a room cutting our housing expenses in half.

Original purchase price: 290k

Balance on Loan: 250k

Rents in our area: 2,000/mo

Mortgage, interest, taxes: 1,600/mo

Vacancy at 5%: 100/mo

Repairs at 5%: 100/mo

Maintenance at 5%: 100/mo

Cash Flow: 100

Other notes: we would have to put in about 6,000 to get it rent ready.

Or we could sell it for 400k and walk away with a minimum of 100k in cap gains tax free.

If we put it in a savings account at 2% that’s 2,000. Cash flow of renting it out for a year is 1,200. It seems like a no brainer to sell but we want to be sure we are looking at all the pros and cons before deciding.

Please advise :)

[Cory Carlson]

Hey, I made this for you. I did a ton of guess work on this analysis but i feel like I am close using your numbers. While operating expenses are pretty low in this analysis it just goes to show there are perhaps better places to put your money than to use this as a cash flowing rental. Utilize you're 8.4% compounding appreciation and buy something that performs better. The question is what other opportunities are out there to reinvest your equity, and do those returns beat your projections? I guarantee a small multifamily would find at least a neutral leverage position (CoC = cost of financing) in your market with $150,000 to reinvest.