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I own my home outright. Sold my last home for a tidy profit and had enough to pay in full for my current home in a lower COL area.
Now I'm in job transition. I'm working a 'survival' job and interviewing for jobs in my field. There is NO Job in my field where I live. I will inevitably be relocating within the next year. Both rentals and sales in my area are HOT! I would at minimum break even if I sell my house. (I have put about 6K into it thus far, nothing glamorous as it is a very modest home) I think it would sell for around 175,000. However, Rentals are in high demand, and I could rent my house out for $1,400 a month (minus whatever would be charged by property management).
That's a LOT of income even when maintenance is taken into consideration.
I'm not asking if I should Or should not go to the hassle of renting. I know it's a hassle. What I'm curious about is this: if I DO sell instead of rent the house, what should I do with the money I would make?
I probably don't want to buy right away in the next location because I got burned a bit by my most recent job and would like to remain flexible. But if I sell this house, what do I do with the money to make it readily available to buy in the next 5 years or so? I can't think of any investment that would equal the profit I would make from renting it out.
If I rent the house, I could borrow up to $40,000 from a fund that is jointly held by me and my mom (she pays the taxes so it would be a 'gift') for a down payment on something new.
WWYD?
Last edited by Stagemomma; 10-01-2020 at 04:54 PM..
But if I sell this house, what do I do with the money to make it readily available to buy in the next 5 years or so? I can't think of any investment that would equal the profit I would make from renting it out.
There isn't a comparable investment that's anything close to safe. That's a strong argument for renting the house (using a good property manager) for at least a year. usually I'd suggest selling, but given everything you've said, renting the house out might actually make more sense.
1) interview and hire a property management company that isn't out to sheister you by making expensive repairs or demands for their fee. Ask, For example, if tte fridge broke down would they go out and buy a $2500 new stainless fridge or buy a $300 one on CL instead ( it's now a rental after all!)
2) get a lawyer to draft an ironclad lease. If at all possible having clauses (if legal) that should covid resurge, that the rent is due, the rent is due, the rent is due....no excuses or eviction will ensue. Be sure it has clauses that the TENANT will say, care for the lawn, snow removal, etc. ( That's an added expense to you, so make tenants do it {free to you}), and any other rules you want.
You may include a clause that IF the rent is paid AND RECEIVED on or before the 1st, no expectations, THAT when the lease is renewed they get a $50/m on next lease discount for being a reliable tenant.
3) rent it out
4) go rent in new area for a year to see how well you like it, then think about buying there.
5) then decide if you want to keep it as a rental, or sell it then, and take a new 15 years mortgage there.
If you turn the home into a rental unit then sell you could end up with Federal capital gains tax on the profit. Be sure you check out the taxes. You are probably ok with a 1 year rental but check out the current law. Also check your state taxes.
I own my home outright. Sold my last home for a tidy profit and had enough to pay in full for my current home in a lower COL area.
Now I'm in job transition. I'm working a 'survival' job and interviewing for jobs in my field. There is NO Job in my field where I live. I will inevitably be relocating within the next year. Both rentals and sales in my area are HOT! I would at minimum break even if I sell my house. (I have put about 6K into it thus far, nothing glamorous as it is a very modest home) I think it would sell for around 175,000. However, Rentals are in high demand, and I could rent my house out for $1,400 a month (minus whatever would be charged by property management).
That's a LOT of income even when maintenance is taken into consideration.
I'm not asking if I should Or should not go to the hassle of renting. I know it's a hassle. What I'm curious about is this: if I DO sell instead of rent the house, what should I do with the money I would make?
I probably don't want to buy right away in the next location because I got burned a bit by my most recent job and would like to remain flexible. But if I sell this house, what do I do with the money to make it readily available to buy in the next 5 years or so? I can't think of any investment that would equal the profit I would make from renting it out.
If I rent the house, I could borrow up to $40,000 from a fund that is jointly held by me and my mom (she pays the taxes so it would be a 'gift') for a down payment on something new.
WWYD?
How many bedrooms?
My idea for my house is to rent out 2 of the 3 bedrooms and put fence walkway a separate porch and a patio and swap the window for a door with a screen door in front that is their new window for their 9 X 11 room they rent which includes a kitchenette and will be tastefully furnished with 1 parking spot in the driveway. Both bedrooms are side by side and identical just reversed.
There is a long hallway with a full bath that the 2 roommates will share and I plan to section off 2 hallway walls with drywall/paint.
So that I can keep access to the property and the rest of the home where I will also be a roommate a senior roommate who pays the highest rent and gets the most access to kitchen hot tub pool garage backyard. My bedroom has a toilet and a sink. Laundry in the garage. I will bathe inside the hot tub when I come around to check up on the property but will have relocated and will used the bedroom to work from as well as the garage so that I have a separate home to live in
Verify if this is still true: if you own the house for 5 years and live in it for at least 3 of 5 years, the profit on the sale of the home will be federal tax free.
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