Sell Home or Keep as Rental??

Question

Currently in North Novi / Walled Lake area

I'm likely moving in next 8-10 months

Personal home appreciated roughly 80-100k since purchased in 2017.

Current low interest rate.

Any general advice relative to this market? Should I sell my house and take the appreciation if I can still get it, or try to keep my house (3 BR, 1.5 bath) as rental property if I can swing it financially?

Any input appreciated. Curious to thoughts on trajectory of this area.

Ethan Kohler · Answer

Net sale proceeds after closing cost and margate would like be roughly $100k.

Rental cash flow would be around $400 / month

Ethan Kohler · Answer

May rent for $2,200-2,400, but uncertain on demand. However, there seem to be quite a few foreign business personal traveling to our area. A rental house in this range might make a little more sense for situation like that.

Mortgage, taxes, and insurance are just over $1500 / month. There would of course be other expense factors to add in though.

Scott E. · Answer

If you can answer these 2 questions that would be helpful:

1. If you sell the property, what would your net proceeds be? (after commissions, closing costs, etc)

2. If you were to rent the property, what would your net cash flow be (after mortgage, utilities, repairs, maintenance, etc)

Theresa Harris · Answer

How much can you rent it for and what are your expenses?  You can rent it for a couple of years and then sell it while still benefitting from it being your home for tax purposes.  I'm not in the US, but I think you need to have lived in it the last 2 or 3 out of 5 years when you sell it to 'avoid' taxes on the appreciation.

Jim Wellington · Answer

It depends on what your goals are and what you’d do with the proceeds. If you’re putting the money into another business venture or real estate investment that’s better than if you were just going to tuck the money in the bank or worse yet bet a depreciating item like a luxury car. Lol

As an investor and one stop shop to find a fund properties via DSCR loans, I’d tell you to keep the property!   you’re locked in at a low rate. Appreciation will slow but you’ve got positive cash flow. If you got untapped equity you could take a Heloc as a second to buy more properties.

Don’t wait to buy real estate. Buy real estate and wait. You bought it now wait!!!

Scott Allen · Answer

@Ethan Kohler Do what @Scott E. said and decide from there.

It sounds like you're cash flowing well with $400/month. Personally, I would keep it and try to buy more. I would talk with a couple lenders to see how they can guide you to be able to buy without having to sell. Think long term. Would you rather have an extra $100k now or 10-20 properties like the one you already have 5-10 years from now.

If you can sell this one and buy a duplex or four unit that you don't mind living in and can make more money as well - consider that too

Eliott Elias · Answer

Take the appreciation regardless, wether you pull the money out with a loan or sell it. If it cash flows keep it.

Lien Vuong · Answer

If you think there's still good opportunity for appreciation in the next 2-3 years I'd keep it and explore the sale at that time. If otherwise you feel that the market has peaked where you are it would be a good time to sell to capture the equity and take out the gains tax free.

Sell Home or Keep as Rental??

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