Exit/ Stay Criteria

[Edward Coleman]

Hello everyone!,

2 years ago I purchased a class A, 3 bedroom 2.5 bath home in a medium sized city as a place for my wife to live while attending medical school. During the time that my wife occupied the home she had two roommates that paid for the vast majority of the mortgage, taxes, and insurance on the home. This was an advantageous situation for us as I live more than 2 hours away for my current work and rent another home entirely. My wife is now complete with the in classroom portion of her school and is moving out of the home. 

What I am trying to determine is whether this property is worth keeping as a rental or whether I should consider selling it. My overall intent is to build a buy and hold portfolio.  Specifically I am trying to determine what criteria I should use to determine when/if I should sell the home or if I should keep the home as a buy and hold property. The numbers are outlined below. 

Home Price: $225,000

Funding Fee: $5,000

Total Loan: $230,000

Interest Rate: 3.75%

Monthly Mortgage/Taxes/Insurance: $1340/month

Monthly Rent: $1550/month

HOA Fees/Year: $150/year

Pest Control: $500/year

Property Management: $155/month

Maintenance: 10% ?/year

Vacancy: 2% ?/year

When I run the numbers depending on what I use for maintenance and vacancy I get a slightly negative ($100-$200) to neutral monthly cash flow, which is clearly not ideal. However at the same time I am adding ~400$ to my net worth in the form of equity in the the home (a number that will only increase as time goes on) and paid only $5000 in the form of a funding fee to do so. Does the value of adding to my equity every month override the negative of not having a positive cash flow? (I can afford the negative cash flow). I look forward to hearing your thoughts!

Thank you,

Edward