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Updated about 1 year ago on . Most recent reply
Rent out or Sell - 2024
Asking for some numbers analysis.
Landlord work is work and risk but I had experience. I'm hoping housing markets will pick up again in Austin/TX area.
1. SELL: ~720K (loss ~30K), 2.5% mortgage rate 27 yrs left. Total monthly house cost ~3500
2. RENTAL: ~3500/mo market rate. House in great shape
Cashflow may not be much but the LOW mortgage rate + deductions may help
How should I approach this calculation?
What other factors should I consider?
Most Popular Reply
Good morning Sean,
1. What's your reason for the move? Do you have to move?
2. Does the $30k loss cover all closing costs or just delta between purchase and sale?
3. Does the $3500 house payment include the taxes & insurance or is that principle only?
4. Consider a Land Contract and Wrap the underlying mortgage all paid through 3rd party Escrow.
- Sales Price $720,000
- Down Pay: 15% $108,000 (higher down payment reduces your risk)
- Balance owed: $612,000
- Int Rate: 6.75% (nice spread on your cost of money at 2.5% - Arbitrage)
- P/I payment: $3,969.42
- make the buyer pay T/I in their escrow payment thus increasing payment
- Hold period - 5 years
- Additional Interest earned = $203,884 (No Longer a Loss)
- No Rental Management needed
- No repair costs
- You can still deduct the interest on the underlying loan as an expense - ask your CPA
- Monthly income without the hassle ($400-500 each month, more if there's T/I escrow)
I'm in NM and do these all the time. I'm not completely sure how they work in TX as you all have some different real estate laws down there than what we do here.
1. What's your reason for the move? Do you have to move?
2. Does the $30k loss cover all closing costs or just delta between purchase and sale?
3. Does the $3500 house payment include the taxes & insurance or is that principle only?
4. Consider a Land Contract and Wrap the underlying mortgage all paid through 3rd party Escrow.
- Sales Price $720,000
- Down Pay: 15% $108,000 (higher down payment reduces your risk)
- Balance owed: $612,000
- Int Rate: 6.75% (nice spread on your cost of money at 2.5% - Arbitrage)
- P/I payment: $3,969.42
- make the buyer pay T/I in their escrow payment thus increasing payment
- Hold period - 5 years
- Additional Interest earned = $203,884 (No Longer a Loss)
- No Rental Management needed
- No repair costs
- You can still deduct the interest on the underlying loan as an expense - ask your CPA
- Monthly income without the hassle ($400-500 each month, more if there's T/I escrow)
I'm in NM and do these all the time. I'm not completely sure how they work in TX as you all have some different real estate laws down there than what we do here.