Hi BP!
So here's the situation. I have decided to become a real estate investor and am super excited about this journey. I bought a home two years ago here in South Florida (my wife, and 1 daughter) for 235k.
We did not anticipate growing our family by two! (2 more girls) So now we are in the process of moving into a home that properly accommodates the size of our growing family. Here's the dillemma:
This current home was a great first purchase due to the fact the previous owners built an attached efficiency that they rented out. When we moved in we kept the current Tenant and that brought in $600 of extra income. Now this was easy for us because we provided the Cable/Internet and paid the utilities bill associated with the property.
Now I'd invested about 3k into the property so far,and mostly things like fixing the irrigation system and full landscaping (the grass was in horrible condition), and so now that we plan to move Im having a hard time on what I should do. Now renting out is a very attractive investment opportunity, but not without some logistical issues I've yet to come up with a proper solution for. Obviously the two biggest ones are (1) Providing a Cable/Internet to the efficiency Tenant, and (2) Splitting the Utility Bill. For (1) I've already confirmed with the local cable company that they cant have two services to one address, and (2) obviously because the efficiency is technically all part of the primary home (It has an external entrance door but is attached to the property).
Doing some market analysis in the area I noticed that the average rental for comparable properties goes for between 1800-2200. If I consider renting for the average which sits at around 1950 and the efficiency (which I could realistically rent for $700) and my current mortgage being 1800 I could stand to rake in perhaps roughly ~500 (with the standard deductions applied) in cashflow. Great, but thats assuming I figure out how to split this utility and cable bill.
Now I also did an analysis of how the property has appreciated over the past couple years. And the comparables seem to sit at a high of around 280k. Looking at the other homes I can see that there were some pretty decent upgrades here n there. My property would need a few upgrades for me to feel confident it could compete at those prices (I have a couple of general contractors coming over this week so we can talk about these upgrades and numbers). My plan is to see if I could make about 10k in improvements to sell the home at the higher market price. The idea here is that I can make enough profit from a sale (no less than 20k after all payables) to use towards an investment property. Personally I would not want a SFH as my first opp but looking into condo/apartment or MFH space. I'd be looking in the general South/Central Florida region for investment opportunities.
I currently owe (recent payoff quote) 227k on the morgage. So I'm reaching out to the BP community to get some insights on my rental dilemma or should I go with the sale (I'm leaning towards sale).
Another thing to note is that I know that soon enough this house will start being costly with major changes, the first one being that the AC unit is quite old and I was budgeting to get it replaced. (It works inefficiently).
Thanks,
