To sell or rent out my primary???

Question

I would love some advice over this scenario which was kinda clearcut to me 2 weeks ago (to sell & reinvest $$$) but now I'm on the fence.

Situation: I have owned my primary for 6.5 years & will be moving in the upcoming weeks to rent a house. I was planning on selling my home because I don't feel the margins fit to turn into a rental, but I am now considering this as an option after getting fixing costs from contractors & further considering refi options.

The #s: Mortgage on the home, escrow - $800 total - ($177 of that goes toward principal if relevant)

Estimated rent - $1200

Current fixed interest rate on the 30year note - 4.625%

Home has $12k in principal paid, with a $26k down payment + added equity totaling approx $63k before closing costs, so I assume I would pocket around $54k after selling (fsbo #s)

A structural engineer inspected & recommended that if I want to sell the home, I should have 13 piers replaced costing $7200 but long story short I think it's more of a precaution & would not have this done if keeping as rental. No slope inside the house & have fixed the minor cracks inside.

So my question is, could/should I keep this as a rental & use a HELOC & pull close to the same amount if I were to sell the home while saving maybe $9500 in repairs (some cosmetic fixes & upgrades best for selling not renting, possibly staging) or am I looking at this the wrong way?

I have 6 rentals in the same city that I self manage so this wouldn't add much more time on my plate after finding a tenant. I'm sure I left out some pertinent info in some regard so please let me know.

I look forward to your insight & stay safe everybody!

John Teachout · Answer

Sounds like you have the numbers you need. If you're not sure, try selling it (as is, not with the foundation repairs) and see if it goes. If not, you can implement plan B and rent it.

Matt Lawrence · Answer

@Bryan Blankenship Yes so much uncertainty at the moment it makes it a little more difficult to plan for a refi, seems like it would take a backseat to the PPP or EIDL which I just learned much more about on BP business podcast #50, highly recommend listening to that one.

Bryan Blankenship · Answer

@Matt Lawrence Thanks! I've had my entire team plus my attorney and accountant on top of the SBA loans to ensure we get the funds we need to ensure we don't hit any bumps along the way. Good luck! :)

Matt Lawrence · Answer

@John Teachout Part of why I initially wanted to sell instead of keeping as a rental was how it would improve my debt/income ratio which has hurt me as far as getting approved for my next loan. I like the idea of listing 1st with that backup plan so I appreciate the feedback.

John Teachout · Answer

If you can make the property make sense numbers wise, it's probably a better idea to rent it out. If you sell it and buy something else, you have closing costs and sale expenses for the sold property and then additional closing costs and financing fees for the new property. (and the seller pays the realtor costs but those essentially come from the buyer too) So if you factor in all the money churning, keeping a stabilized property that you already have a loan in place on makes sense. That said, if it's a pig from a rental standpoint and isn't going to perform, dump it.

Bryan Blankenship · Answer

@Matt Lawrence When in doubt, I do both. Basically what @John Teachout said - list on the MLS and make preparations for your plan B in the background. If no one bites, switch gears and do the work needed to it. If this has increased the value enough, re-list at a higher price with fresh, beautiful photos. If that's unlikely to happen based on the first listing (lack of showings or good feedback, etc), then advertise it as a rental.Doing a refi is getting more difficult for the time being. Lenders are either pulling back or they are so busy they're pushing refis out. They're still happening, just on a delayed timeline. No one knows yet how much the lending market will change with everything that's going on!

Matt Lawrence · Answer

@John Teachout That's a good idea, I might try that for 3-4 weeks & adjust from there. Am I right in assuming I would get a similar amount in hand with a refi vs selling the home? I haven't crossed that path yet but know I need to start using that option if not with this home, then a few others.

To sell or rent out my primary???

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