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Since this post was moved, updating location : Phoenix AZ metro
Hello all! This is a debate that's been going on at our household the past few weeks. Inputs welcome.
We bought a 4bed/2.5ba house in the East valley at the peak of the Boom in 2005. We moved to another house last year and started renting out the house. With the rental lease coming to an end, wondering what we should do. If we sell now we take a loss of 100K, but at least get back the initial down payment we did. The rent now breaks us even (mortgage + HOA + property tax + property management company) but of course repairs and such are extra. We do not have a locked mortgage right now and if we choose to keep it a rental will have to refinance and lock. Given this what would you do?
This is just an opinion to see if I am missing anything. Thanks much.
Last edited by hobbes1234; 02-27-2017 at 10:14 AM..
I think you need to start getting the numbers down on paper. Figure out how much equity you gain, minus those extra expenses, from someone else paying down the mortgage versus what you could earn if you sold and invested that money elsewhere.
Location: Stuck on the East Coast, hoping to head West
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Quote:
Originally Posted by hobbes1234
If we sell now we take a loss of 100K, but at least get back the initial down payment we did. The rent now breaks us even (mortgage + HOA + property tax + property management company) but of course repairs and such are extra..
How do you take a loss and get your down payment back?
We bought a 4bed/2.5ba house ...at the peak of the Boom in 2005.
If we sell now we take a loss of 100K, but at least get back the initial down payment we did.
Neat trick. Figure a way to trademark it and you'll earn a million.
Quote:
We moved to another house last year and started renting out the house.
With the rental lease coming to an end, wondering what we should do.
We do not have a locked mortgage right now and if we choose to keep it a rental
will have to refinance and lock.
The rent now breaks us even (mortgage + HOA + property tax + property management company)
but of course repairs and such are extra.
And when you include the inevitable repairs and such...
how does that "break even" play out on the Sch E ??
You're breaking even right now with the rent at your current ARM rate.
What will happen to those costs when you refinance to a fixed? I wouldn't want to be holding adjustable rates with rising interest rates. Do the new numbers make sense? I'd guess probably not.
We have built enough equity that we roughly get that amount back despite selling for 100K lesser than our purchase price.
It sounds like when your house sells, after paying off the mortgage and closings costs/fees, you would walk away with money in your pocket. If I were in that situation, I would sell.
Landlording is tough business. Especially, when you're just breaking even and will at some point be losing money because of typical maintenance/repair costs.
I just sold my rental. I was in a virtually identical situation (bought at peak of the market in 2004, couldn't sell in 2010 when I moved out, so rented it. Since there were a lot of owners trying to do the same thing at the time, rents were also depressed, so just made enough to cover expenses). I had good tenants for the whole period, but am still glad to be rid of the hassle, even though I lost over $100K. If the RE market has improved at all in your area, I'd sell.
This is Phoenix Metro, so volatile! No way will it go to that level anytime soon
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