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This is in the Portland metro area market, Vancouver, WA area. We purchased the model of a new construction neighborhood a year and 6 months ago. We are wanting to move because the city did some re-engineering of Main St that has a lot of folks cutting down our secondary road at all hours to avoid it. Unable to sleep with the windows open due to it(loud pickups with exhaust mods are popular). Also a lack of privacy and regretting some compromises we made on this place basically.
We've got some options due to the value of our place jumping from $250k when we bought it to ~$310k(comp estimate from 3 different realtors we interviewed). Have also gotten a significant raise which opened more options for a new purchase. We have found a lot with mountain, tree, and lake views we love and put in a contract for some new construction on it with an 8 month build time. Chose a plan that satisfies all needs and wants, so no compromises this time. We did not put a selling contingency in. Largely because it's not needed as houses here in that price range are gone in a week and that would require us to be on the market now and necessitate two moves and temporary housing.
So after all fees and such take home from selling would be around $50k. But the realtor we are using threw us a bit of a wildcard. He actually is throwing away his chance at a seller's commission to recommend we think about renting. Rent would clear around $500 over mortgage. We would use a property manager since we have no experience and that would diminish returns a bit.
There's a real housing shortage here and skyrocketing demand for both rentals and houses in our price range.
TLDR: Which would you do in a white hot real estate/rental market?
Sell:
$50k to put into down payment of new place, reducing mortgage payments by around $230.
Rent:
$340/month over mortgage after property manager fees
Tight rental market allows for screening for only top qualified candidates
Preserves low 3.25% mortgage on existing property while continuing to appreciate in value, easy to sell if we decide being landlords is not for us.
Potentially keep as long term rental and source of "passive income" on into retirement.
Yeah, absolutely. Either option is looking good to me. Comes down to a question of short term cash out or potential long term cash flow. Or split the difference and just plan to rent for another few years or until whenever the market starts to cool, then sell at top of market.
I like the idea of being a landlord personally. Not sure what your job situation is like or if you are a two income household. Also not sure if you are from the area and going to be long termers
I would look to rent it out provided you have 20% down for the new house, money in the bank for repairs or an extended vacancy, and good jobs bringing in continual income.
Last edited by GiantRutgersfan; 04-06-2018 at 04:48 PM..
Work in software development, good salary, and can work remotely from anywhere. No commute. No kids. Just wife and dogs. We're both military brats who grew up moving every 3-4 years and there's definitely a bit of wanderlust that gets us thinking about moving around that interval. But we think we've found our happiest place in the US anyway here in the Pacific Northwest.
Rental route would cut down payment to 10-15%. If appreciation keeps going the way it has been PMI would be wiped out in a year or two. But that is another factor in the calculus.
Rent it out. The rental is only going to become more valuable as time goes on, generating higher rents and more passive income. You do not have anything to lose fiscally provided you keep up your insurances(h.o. and general liability now that you are a landlord) , insist your renter carry renter insurance, and screen renters well. You can always sell in a year or two and refi your new house's mortgage to buy it down with the cash if being a landlord is a hassle.
This is a hard decision. But, also consider that you will lose the opportunity to roll over capital gains into the new place if you turn the old place into a rental. Just another factor in the equation.
I have rental properties and have been very careful about the tenants. So far, no real property devastation so no regrets about being a landlord. Others who have used their money for investment have scored much better than me in capital enrichment. However, real estate is a game I understand much better than the stock market. So another thing you should use in your evaluation is using your equity for another investment vehicle (rather than putting it back into the new house) and doing some abstract estimates on ROI.
Yeah have enjoyed the meteoric rise of my 401k over the last decade but that appears to be over and will return more to historical growth rates. Real estate investment in a hot market should compete well. Have about 6 months to research and decide.
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