Denver - Sell or Rent Advice

[Landon Miller]

Good Afternoon (sorry this is long but want to give a full picture)

I bought my first house here in Denver Feb 2020, my budget wasn't huge so I have a 640sqft (2br1bath) single family with a large yard in a C class (assumed) but improving neighborhood. There were some interior updates done previously (updated kitchen, flooring, windows), but much better than many in the price range. I have been updating since day one and many ideas for additional projects as I wanted to convert to a rental, refi to pull cash and buy a bigger primary with my GF (she is not an owner on my current).

I believe to get it rent ready (next summer) I would need about 14-16k more and then if I factor in AC/Furnace we're creeping into the 20k range (house has asbestos siding panels and the broken ones need replaced and then get the house repainted 6kish or I have it covered with vinyl which kills two birds but probably 2-3k more at 9k). Roof will eventually need repair as well as sewer line (not immediate but definitely within 10 years)

We need to move... and I can't decide what is a better option.. Sell or try and push through and get it rented. I am pretty confident the property would cash flow $100-200 after paying a PM (not dealing with renters) so essentially cash flow $ 0 - 100 if I factor in saving for repairs.

I want to keep it as a rental especially for the appreciation (say what you want but Denver will always be outgrowing most places in the middle of the country) and with the neighborhood slowly improving. But I can't escape the reality that currently I do not make enough to float periods without renters while splitting a mortgage on a new house.

If I were to sell, doing minimum repairs (I don't think I can escape 8-15k worth) I should be able to walk away with about 50k (closing costs/commission already paid), and after a new downpayment/savings/money for updates I would have about 20k free to look for Cash Flowing out of state.

What would you do?

[Tanner Crawley]

I would definitely want to keep my rental in the state I live in but it sounds like you don't have the income to cover any vacancy, unforeseen maintenance etc. 

I would also not pay a PM if the income is going to be tight. Managing one unit is not going to be that time-consuming, no need to give away money to a PM. 

I also wouldn't want to pay taxes on the sale but you would have to live there until Dec 2022 to get the primary home exclusion. Do you have any stocks or other investments that have negative returns that you could sell to offset the gain from your home sale?