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Hope I can get some advice. Currently I'm planning to move out of my first home in 6 months (in late June) and rent it out. I've done some research on the topic and it seems to make financial sense I just want to get an idea from others with more experience if this is a good idea financially for me and any first-time renting tips.
My Condo is worth about $115k (2 bedroom, 865 sq ft) and it isn't worth it for me to sell at this point as I bought it for $113k but of course had to pay UPMI and closing costs of 6% that were bundled into the mortgage. I have quite a bit of equity in the home (about 18%) but right now I am looking at it as an investment home for renting. Honestly not looking for net cash flow here but rather just to have someone pay my mortgage so I can have the home in 30 years for retirement purposes/savings.
Right now the place can rent for $1200-$1400 a month. My mortgage + insurance + HOA + taxes is roughly $900 and will be $800 next year thanks to the cancellation of PMI. I found a decent property management company in the area (30 years in the business with decent reviews) that will manage it for $75/month + 1/2 first month of a new lease. I figured that at worst with a new lease each year and renting at the lower end $1200 I can net $3200/year (after PMI is cancelled). My intention is to put all this money into a savings account for maintenance expense and any possible non-paying renter issues. Of course if this grows large enough I will use some of it to pay down the mortgage faster.
Does this seem like a financially decent plan? I'm curious to know if what the PM company is asking is decent? I've been quoted $75-$125 by a few companies and while this is the cheapest, he has good referrals and I felt most comfortable with him after chatting on the phone (also nice to know he's been doing this for 30 years).
Appliances are all fairly new, only 4 few years old including the furnace so any major maintenance is probably several years if not longer down the line (except for maybe a new carpet).
I can appreciate any advice anyone has, good or bad, thank you!
My mortgage + insurance + HOA + taxes is roughly $900
and will be MORE next year thanks to (non owner occupied tax rates plus Fees and other expenses)
...can rent for $1200-$1400 a month.
Does this seem like a financially decent plan?
I'd call the numbers marginal at best.
Better than most "accidental landlords: but nothing to tout.
Quote:
I'm curious to know if what the PM company...
Finding and keeping a good tenant is easier and less expensive than finding and keeping a good PM.
If anything the need to have a PM is the biggest red flag regarding the whole concept.
Sell now. Get what you can. Move on unencumbered.
if/when you decide you DO want to be a landlord... find a property that makes better sense.
I've done some research on the topic and it seems to make financial sense I just want to get an idea from others with more experience if this is a good idea financially for me and any first-time renting tips.
Don't do it. It will kill your soul when you come in after your first renter and see what they've done to your house.
Renters are renting because they can't get a house. Except for the few newly-divorced singles that need a place until their divorce is finalized and they can buy another home, it isn't worth it.
I'd call the numbers marginal at best.
Better than most "accidental landlords: but nothing to tout.
Finding and keeping a good tenant is easier and less expensive than finding and keeping a good PM.
If anything the need to have a PM is the biggest red flag regarding the whole concept.
Sell now. Get what you can. Move on unencumbered.
if/when you decide you DO want to be a landlord... find a property that makes better sense.
The problem is I will be out of state and possibly out of the country so I have no way to feasibly manage the property so relying on a PM is my only choice. I have 3.25% locked for 30 years when my credit was a bit better than it is now so realistically will not be able to get another property anytime soon especially not at this rate now that the Fed is hiking.
Don't do it. It will kill your soul when you come in after your first renter and see what they've done to your house.
Renters are renting because they can't get a house. Except for the few newly-divorced singles that need a place until their divorce is finalized and they can buy another home, it isn't worth it.
Isn't that what a security deposit is for? I mean how much damage can a renter really do to a 2 bed 1 bath 860 sq ft? Maybe I'm naive...
The problem is I will be out of state and possibly out of the country so I have no way to feasibly manage the property so relying on a PM is my only choice.
Then absolutely don't do it. The PM is only there to get your money; they won't actually care about your home.
Go for it. Find a good tenant with good credit and decent rental history. Do your due diligence on the background checks and you should be good. Lot of things can go wrong if you don't properly vet a tenant. Get some professional help by using a real estate agent if you need help in finding the right tenant.
Isn't that what a security deposit is for? I mean how much damage can a renter really do to a 2 bed 1 bath 860 sq ft? Maybe I'm naive...
WHAT?
Your house will be destroyed. Never plan on going back to live in it. It will never feel the same. It will never smell the same. I'm saying this as a renter. If you don't understand what will happen, and think this us going to be a profit right from the get go, you are horribly mistaken, and have NOT done any accurate research. If you don't have a hefty sum saved for your new landlording interests, then you truly need to rethink this.
I can't comment on the property manager issue, I've only rented straight from the landlord or through a large complex where you only speak to thr reception desk and maintenance.
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