Moving out - Primary home Rent vs Sell ?

Moving out - Primary home Rent vs Sell ?

Member since 2024 · 13 posts · 14 votes

Hello All,

I am moving out of state and currently own 2 Bed 2 Bath condo that i have lived in for 4 years as of this month.

Numbers 

Bought it for  

              $248K in Dec 2020 with $13K down (5%)         

              $25K  Upgrades added.  

              $215K @ 2.65% rate to be paid off

Rental in area -  

I can rent this for $2600/month and it will give $500 cash flow after mortgage and HOA.

              (rents also peaked from $1900 to $2600 in 2 years)

Sale Price  -  

           $360K - $370K in the area for same kind of units. 

            Zip Code: 0883

           i feel it appreciated very well and i don't think it will go any more in next few years

Need Advice  -  rent this property  or sell it ?

            - If i Sell , as this was my 1st house and lived in 4 years, do i need to pay capital gain tax ? 

            - if i sell, i will add some more money to invest in multiplex unit.   -- is this the right time to have cash ready for deals ?           

           - just rent it and wait till it get paid off ? 

I am open for either options but would like experts advice for a newbie - which will be most beneficial  down the line in 5 to 10 years. 

Thanks in advance 

0Reply
20 views

4 Replies

Jump to latestLatest
  • Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
    1y

    These are all good options. You have already laid out both scenarios.  It sounds like you are just having trouble pulling the trigger.  Is that because you don't know what your Real Estate goal is?

    If your goal is to have a cash flowing portfolio of rentals.  Congrats!  You are off to a great start with your first one that cash flows.  Plus, that is the cheapest that money will ever be for you.  2.65% interest rate?  For an investment property (purchased as an owner occupant), that is insane.  Why would you want to sell that from your portfolio?  You can use this property to hedge any others that you add that may only cover themselves, or require supplement until they are paid off.

    HOWEVER, if you have decided that your goal is to use Real Estate as a stepping stone to build wealth by upgrading the property you hold each time (condo to house, house to 4-plex, 4-plex to 8 unit, etc) then I think you are right to sell now while you think the property is at the top of it's appreciation.

    It will be hard for anyone on BP to tell you what to do as we don't know your goal.

    You are right.  You have the ability to sell while limiting your capital gains tax because you lived in 2 of the last 5 years.  So, if that is important to your next steps, it's certainly worth considering.  Down the road, you can also use the 1031 exchange to defer taxes as you go from property to property, as long as they are like for like.

    I hope that helps get the ideas flowing....

  • Member since 2024 · 13 posts · 14 votes
    1y

    @Cara Lonsdale

     Thanks for detailed replay. i do want to build wealth but i will wait little more then as i have to live 2 years in last 5yrs. thank you so much 

  • Realtor · NJ · Member since 2023 · 215 posts · 99 votes
    1y

    If I were in your shoes, I'd keep that 2.65% rate. You will easily cash flow and as long as you are able to manage out of state, it'll just be a nice cash flowing property in your portfolio. 

    If managing out of state is something you'd rather not do, you could also hire a property manager or a find a cohost to explore the MTR option. 

    Also something to think about is if you did sell, what would you do with the money? Opportunity Cost!

  • Property Manager · NJ · Member since 2017 · 786 posts · 396 votes
    1y

    @Naveen kumar Vadlamudi Make sure you know how financially sound the HOA is and if there are any special assessments coming up. If you get hit with a special assessment at some point during your time renting the property it could reduce or eliminate your cashflow

Join the conversationCreate a free account to reply, vote on answers and follow this thread.