All Forum Posts by: Matt Madalis

@Tyas FrantzIf you sell the house are your plans to purchase another house for investment/rental or do you have other plans to do something will your equity?  If you sell you'll be looking at around 6-7% to sell with commissions and closing costs.

Are you in a desirable area that will attract high-end tenants?  Some times renting a quality property to attract quality tenants may be worth it despite it not meeting the "1%" rule that was mentioned above.  Also, since its now your primary residence it makes showings to potential tenants much easier.  You also should have a better idea of expenses/maintenance going forward.

@Josef Torkelsen I'm no CPA so make sure to consult one before you commit.  It sounds like you are planning to rent your single family home and move into a rental?

In addition to the tax benefits for using as a primary home (interest, property tax write offs) you will also be able to write off things such as insurance, management fees, or anything else related to converting it into a rental.   One of your best tools will be depreciating your property since it is now considered a depreciable asset.  There are many topics here on BP and books written on the subject.

From a purely numbers standpoint, selling the condo may be the best option, but since we are talking commissions, should also mention if you sell you will likely pay 5% to the realtors (15K) plus may need to offer another 5K or so closing cost assistance to a potential buyer.

If your condo is in a good location that will attract good tenants renting can be an option. It depends on your situation and how much self-managing you are willing to do. Despite a likely tight margin, you still have someone else paying your mortgage.

Be honest with yourself about how much you will need to do in repairs (both now and in the near future) and that will help determine your numbers.

Good luck.

@Rich Harris another component you can look at if you are working with a Realtor:

Have them do a comparative market analysis (CMA) this can show you how long properties on the MLS have been vacant on the market. It will also show how long properties sat before being being rented, original listing prices vs rented prices, etc.

@Joe Villeneuve great advice and thanks for sharing.  In my limited experience banks do have a set price they will accept but does not necessarily mean an investor needs to pay that price.

Where I'm at in Maryland everything is handled by mail.  My suggestion would be to call your county assessment office and speak with someone who handles appeals.  They could give a better idea of what types of documentation are needed.

Having just been through the appeals process myself it was pretty painless, although it was right after a purchase so I had an appraisal which is all that was needed.  As the others mentioned a good set of comps should suffice.

Good luck.

Thanks for the reply.  So if I understand, my original purchase price has no bearing on the sell price once its converted to a rental.  

I bought a SF townhouse in mid-2008 as a primary residence, after living in it for 5 years we converted to a rental in 2013.

Since the fair market value at the time of conversion was less than the purchase price does that have any effect on gains/losses when I eventually sell?

For example, if purchase price was 300K, my fair market value when converted to rental is 260K, if I sell for 280K do I pay tax on the on the gain and does the original purchase price have any bearing on the final price when selling?

My current tenants lease expires in June, I'm hoping they stay but no guarantee.  I don't mind being a landlord (although I've had it pretty easy so far).  I would like to keep it at least a few years so its time to explore some other options

@al williamson thanks for the suggestions, what would examining my HOA do? I pay a fixed cost each month.

Well my thinking is that I would sell before the 5 years but the lower rate would give me some additional cash flow each month.

Perhaps I should get some actual numbers on a refinance to evaluate how much my closing costs would actually be.

Thanks for the responses.