Moving- To rent or to sell

[Kevin Wyn]

Just bought a townhome in Hurst, TX about 4 months ago (before I started learning about REI). For those that don't know the market is crazy in DFW and it was extremely hard to buy a house. We ended up getting a new build townhome so we wouldn't have to get into any more bidding wars. Now there is potential we will be moving back to Indiana where we are originally from for a different job. I am trying to figure out if I should sell our place or rent it out and sell it in 2-3 years. The economy is very strong and a ton of businesses are moving to DFW so the housing demand will not be shrinking any time soon. Houses are appreciating very quickly, among the fastest in the nation. It is in a working class neighborhood with a good school system and centrally located So here are the numbers Rent potential 1700-1775 (1750 used below) PITI w/ HOA-1300 10%Management-175 10% Vacancy-175 6% Maintenance- 105 No cap-ex(new build and plan to sell 2-3 years) -also HOA covers yard work and building roof/structure This essentially puts me at cost and potentially even small negative cash flow. With the house already bought, selling now would be a guaranteed loss. During this time the house will appreciate and tenants will pay down the mortgage. What are your thoughts?

[Andy Webb]

If you decide to lease it and intend to sell in 2-3 years, you might want to lock in a 2-year lease term (or even 3-year?).  That would reduce your vacancy costs and turn costs (maintenance) - assuming you put a good tenant in place and don't have to deal with an eviction.  As a new build, I would hope your maintenance is closer to zero, though I understand budgeting conservatively.

For this scenario I don't think you would need a management company.  A management company helps you collect rent - you can do this electronically;  they manage repairs - as a new build these should be minimal, and you can build up your contractor connections before you depart.  Since you are in construction, do you already have those connections?  We self-manage and most issues are handled over the telephone or e-mail.  If you want someone to keep an eye on the property, pay a handyman to go by quarterly for a quick check up - he can make sure the A/C filters are clean and do any spot repairs as needed.

Just a thought.

Andy