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I"m having a hard time deciding on whether or not to sell my home in South Austin. I bought it 5 years ago for $130k and have had it appraised by a realtor recently who thinks we can get $245k to $250k for it. I owe about $117k on it. I could use the proceeds to pay off my student loans ($25K) and put the rest towards retirement.
I had to move away from the home due to severe allergies to Austin. I feel much better health wise living elsewhere so I know for sure I won't ever want to live in the home again. I'm currently renting it to a friend of mine for $1450 a month. My mortgage including taxes and insurance is $1150 so I'm clearing $300 a month on it now.
I'm still within the time frame where I won't have to pay capital gains taxes on it if I sell it before the end of April this year.
I'm very conflicted about selling it because of my health issues. Due to chronic health issues I don't really have any retirement savings because I've had to spend so much over the years on my health however I am a bit better now and am working full time again. I'm 47 years old. I really don't want or need the stress of being a long distance land lord and the thought of selling the house is a relief but I have several family members telling me to keep it for future rental income. The house will be paid off in 14 years and by then I'll probably be able to rent it for $1800 per month or more since I doubt Austin' appeal as a place for young professionals to move to will slow down considerably. My family is telling me that I will really regret it in the future if I sell it now due the that income I could be getting right when I'll be ready to retire.
I'd appreciate any thoughts or comments as I deliberate. I need to make a decision by the end of this week. That will give me 60 days to sell the house. The market is hot in South Austin now so I know it will sell quickly.
Sounds like you got your answers already. Specifically, you have chronic health issues and it sounds like you don't even WANT to be a landlord. That will take the stress of you, especially if you're one of those people who don't like dealing with home issues or repair issues, etc.
You got to do what's right for you. I know your family and friends probably means well. Maybe the market will rise in the next couple of years maybe it won't. No one really knows, but it sounds like it's a burden for you to carry it? (You did say the thought of selling brings you relief...) Of course, your family is in the right that the rental income could come in handy for retirement...
Like the other poster before me says, maybe you can buy one nearby.
Good luck on your decision. Personally, if I don't MIND being a landlord, I'd sell it and buy one closer to where I actually live.
The income would be nice but you have to weigh against the stress of being a long distance landlord. What happens when your friend moves out, how will you find a new tenant? At that point, you may have to think about hiring a management company to deal with things, cutting into that rental income. Plus by the time the house is paid off in 14 years, or certainly at some point shortly after that, it's likely you will end up with some big ticket items like a roof, water heat, HVAC as well as needing to do some cosmetic updates if you want to attract quality tenants.
Personally, I think you'd be better off taking the proceeds now while you can avoid capital gains and then if you really want to be a landlord, consider putting some of that towards a local property that you can manage yourself.
^^ Yep. Excellent points. I've had the opportunity -- but never wanted to be a long-distance landlord….or "real estate investor," as my brother tells me I need to think of it. My mom had a rental house so I know the pros and cons.
I've always sold the house I moved from, took the money and ran. But I know me and I don't have ANY desire to be a landlord. OP, do you, really?
I know all the pluses of write offs etc. But for me my home were never is as good a shape as when I sold them. After renting a house out for years, the wear and tear on it would likely mean you'd have to put money into it just to sell it, unless you'd find a buyer to take it as is. And sure, you can write off repairs -- but you have to have the money to DO those repairs first….then LATER you write it off. Sam for that $300 a month you make -- that's before set asides for repairs (or fees should you decide to let a property manager just handle the property. (and even then you have to check on the property manager.)
I want as stress free a life as possible. For me, being a long-distance landlord doesn't support that. MAYBE, if I were in the same area -- AND the house had no mortgage. But long-distance. No.
ETA: You think you clear 3,500 a year…..ONE instance of the 'wrong kind of repair' can eat up or wipe out years worth of what you make.
Sell it. Being a long distance landlord sucks for the novice owner. It's probably an older house. What do you do when major repairs need to be done? That money you're "clearing" will be gone faster than you'd think.
Not only are you paying taxes on the income, but any future gain (get out the crystal ball) is going to be taxed with capital gains as well. You would have to own the house a significant amount of time to make up the difference between no capital gains now, verse capital gains in the future.
Plus, the longer you hold the house, the more changes of things going wrong and you'll be paying more for repairs. PLUS, since you're not local, you'll want to get a property management company to handle it for you and there's a chunk of cash too.
You need to run all the numbers possible to see if it's actually worth the additional burden to keep it when you don't want it. It's completely different owning property out of state for someone who wants to own it, building up a portfolio. Verse someone who only owns it out of state because of necessity of not being local.
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