Rental Condo - Keep for now or Dump

[David Durrett]

Hey guys new to the forum - you come highly recommended from the Bogleheads!

My wife purchased a brand new condo in 2010 for $160,000. 2 years later, he grandmother passed away and we purchased her house and move in.

The deal for moving is that we got the house for $160k and the current market value was around $250k.

The bad news (well kinda) is that the condo mortgage + fees are $1,150 and we rent for $1,200...resulting in a net $50/month or 4%. I know that's on the low end, but it covers everything and we've never had a vacancy because identical condos in our complex rent for $1,250 - $1,400. I could raise the rent $100 - $200/month, but my fear is that if it sits vacant for 1 month, the extra rent would cover that month, resulting in no real gain.

Also, since the condo was new in 2010, there has been no real maintenance issues since then. I live 10 minutes away and been able to take care of anything that needed to be done between tenants in a day (replace vent fan, caulk, touch up paint, etc). My 3 different tenants have been great and i've had no payment issues or problems. The first person vacated due to job transfer and the second was deployed with the military.

Now that you know my story HA, here's my questions...

Condo purchase price: $160,000

Condo mortgage: $138,000

Current market value: Around $145,000

If we sold the condo for the average of $145,000, after a 7% Realtor fee we would be left with $135,000. At best we would break even.

Am I better off breaking even now or continuing to rent with such a low return? My rationale to keep is that each year we gain $5,000 in equity as the mortgage is being paid by someone else. The other option is that if the current tenant likes the place and would want to purchase, I could sell without a Realtor making my profit after the sale around $10,000 and a tax loss of $15,000 ($160k purchase minus $145k sale price) Just want other opinions to justify one way or the other. Thanks!