Saint Charles, IL · Member since 2015 · 19 posts · 3 votes
So here's the situation, my parents have a home in my hometown and are also renting one out in Chicago after we moved here, he makes both the rent payment and his own mortgage payment for his home. There confused on whether to sell the house now (and not make much profit) or rent it out for almost the mortgage they pay now (and still have to pay about 200 dollars a month) seeing as it wouldn't rent for that much in a small town, but after a while own the home after renters pay it off, any thoughts??
Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
11y
I'm with Jesus. If it's not going to cash flow then the best thing to do is put it on the market and get out from under it.
If you're only cash flowing $200 a month, you'll eventually lose money. A new central AC/furnace can set you back $4000 give or take. That's two years' worth of cash flow wiped out.
I speak with a lot of people who want to hang on to a property (usually a condo) for some hoped-for future appreciation. But that's not really a good strategy. No one knows what the market will be like five or ten years from now. Remember how quickly the market unraveled in 2007-2008?
It comes down to being a very personal discussion. Our house are new enough that "we" personally would keep renting it out. We have done very well on small margins but that is us.
Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
11y
If your rental income less your mortgage is a $200 negative cash flow, your true negative is going to be a multiple of that with repairs and vacancies. The only way that thing wins if its in a market with massive appreciation, which isn't going to be the case in rural area.
Saint Charles, IL · Member since 2015 · 19 posts · 3 votes
11y
yea I think its more of a personal home they feel attached too, its in litchfield Il, but I think they need to sell it too, it wouldnt rent for that much seeing as its a small could try town so yea there better off getting rid of it, thanks for the feedback!
Property Manager · Pittsburgh, PA · Member since 2012 · 267 posts · 136 votes
11y
Can they refi so the rents cover the mortgage payment with a 10% monthly reserve? If they can do that it makes sense to have renters continue to pay down the mortgage only if it doesn't lose money. If this can't happen I would not hold on to a property costing me $200/month