Keep Or Sell Negative Cashflowing Rental - SoCal

[Luca Shaw]

Hi all,

Last year I bought a 2/2 SFH in a suburb of LA (ventura county) fully intending to use it as a primary home. 30 year fixed @ 5.375%. Recent developments in my career lead me to have to move about 2 hours away. That leaves me with deciding what I'm supposed to do with this property. Its a 50s property but I've updated a ton of things about it. Roof probably has a few years left on it, only real weakness is eventually I'll have some major mainline work needed.

My options appear to be the following:

1. Rent it out. I can get $3000-3500 rent pretty confidently after looking at comps and discussing with various property managers. This would leave me basically cashflow neutral/slightly positive on my P&I but negative after taxes, insurance, and expected maintenance (assuming 1.5% of home value in maintenance per year). After all of that, I'll be ~$1k negative per month but likely hoping for some solid appreciation as a source of return. I can afford negative -1k monthly with this new job but obviously I don't love it.

2. Sell it. I can probably sell it and after fees probably lose 20k or so (as far as down pmt + closing costs + improvements).

Renting (even though negative) seems like a good way to go because I have a good risk tolerance, however I am worried about California landlord laws + unexpected maintenance/capex. Looking for BP community suggestions as this is weighing on me. 

[Nathan Grabau]

I would rent it over taking the 20k hit. It keeps your options open. I personally am extremely bullish on the housing market over the next 6-12 months too. SVB failing yesterday will almost 100% force the fed to cut rates which will set the RE market back on fire.