Real estate strategy, MTR or Sell home

[Adriana Siu]

Hello! 

I have a home that I bought for 600K+ about 38K closing costs, interest 2.875%, I've owned it 3 years and owe 220K on it. It's in Austin, whose market is getting flooded with new homes right now. It's not in a super prime area, but it's in a nice suburb 15 min from downtown/all the good stuff. I could rent it out for $3,500 unfurnished. Utilities are costing me around 450/mo plus another 400/mo for pool and garden maintenance. Should I keep it or rent it out unfurnished (w/ management I will cut even or loose like $100 per month cash flow)? 

Thanks for your input.

[Travis Timmons]

The cost to furnish a house is death by a thousand cuts. It'll exhaust you. Don't make it a MTR unless you want to own it for another 3-5 years. 

My take on converting to STR or MTR is that if you can't find one or several comps that make the decision a no brainer, don't do it.

[Bonnie Low]

Austin is a very popular place for MTR but, as such, it is also very crowded. Before you make your decision, check  Furnished Finder to see what the competition looks like and how many have wide open calendars to get a sense of supply & demand. This will also tell you where the bar is set by your competition because that ultimately will tell you what kind of furnishings and amendments you'll need in order to be competitive. A good rule of thumb is to plan on spending approx $10k on all the standard items for your unit like your washer & dryer, linens, small appliances, dishware & cookware etc., plus $2-3k per bedroom. And don't forget to equip your outdoor space if you have one because that is a major draw. 

All that said...if you're not confident you can get at least 1.5x your LT rents as an MTR, I think I might go with long term but skip the management company and DIY. 

[Bill B.]

1). You should be able to get weekly landscaping and pool service for $100/mo each. So you’d actually be cash flow positive. 

2) do you not have any net gain? If so, sell tax free now.

[Conner Olsen]

Quote from @Adriana Siu:

Hello! 

I have a home that I bought for 600K+ about 38K closing costs, interest 2.875%, I've owned it 3 years and owe 220K on it. It's in Austin, whose market is getting flooded with new homes right now. It's not in a super prime area, but it's in a nice suburb 15 min from downtown/all the good stuff. I could rent it out for $3,500 unfurnished. Utilities are costing me around 450/mo plus another 400/mo for pool and garden maintenance. Should I keep it or rent it out unfurnished (w/ management I will cut even or loose like $100 per month cash flow)? 

Thanks for your input.

I own MTR in Austin. It can be a great strategy especially if you are in a desirable area (which it sounds like you are). I know people making 5-6k/month doing MTR in Austin. Let me know if you want an introduction.

[Ryan Kelly]

@Adriana Siu if you can get $3500 cash flow and have a low interest rate, it should cash flow well. Typically, tenants will pay all utilities on long term rentals, so that comes off your plate. It will take a bit longer to lease a home currently, but if you bake that in, I’d keep it.

[Leah Smith]

It is so hard to find a cash flow property now, and we probably will never see that low rates again. If it still brings cash flow, you should keep it for sure!