Renting vs Selling Due to Military PCS (Relocating)

[Anthony Hidalgo]

Hello!  We just found ourselves in a new situation, and I wanted to seek advice from those who have experienced something similar.

We recently purchased a new build home in August 2022 in Colorado Springs, and we have been notified we are scheduled to move August/September 2023.  We are weighing the options of selling vs. renting out our new home.  Current situation is as follows.

Rental Properties:

SFH in Fort Knox, Kentucky - Cash flow positive - $300 / Equity 80K / 3.375%

SFH in El Paso, Texas - Cash fllow positive - $200 / Equity 90K / 3.375%

SFH in Colorado Springs, CO - $350 / Equity $140K / 3.625%

Current Home:

SFH in Colorado Springs, CO - Mortgage - $3300 4.375% 30 YR Fixed VA

Rental comps for a 5/3 in Colorado Springs, CO are anywhere from $2800-3400

We want to purchase another property when we go to our next duty station (possibly San Antonio, TX), but our VA home loan is tied into our current home. We would like to keep our new home, just in case we plan on retiring in Colorado, Springs.

Any information or incite would be greatly appreciated!

[Nathan Gesner]

Quote from @Anthony Hidalgo:

As an investment, it's a loser.

Let's say the mortgage is $3,000 and it would rent for $3,400. That only leaves $400 per month or $4,800 per year to cover vacancies, maintenance, capex, property management, etc.

Average maintenance cost is 10% of the annual income or $3,600. One month of vacancy will cost you $3,000 in lost rent plus utilities. Property Management will cost you at least $3,600. All combined, that's $10,200 in expenses and you'll only have $4,800 set aside.

What if you get a bad renter? They fail to pay last month's rent and leave the place filthy and damaged. You spend a couple weeks cleaning it up, and then a couple more weeks to find a new renter. That's two months of lost rent ($6,000), lost utilities ($500), and maybe another $1,000 or more for cleaning and repairs.

Even if you self manage and everything goes perfect, you will likely lose money because the rent isn't enough to cover even ordinary maintenance.