• There has been a recent cluster of spammers accessing BARFer accounts and posting spam. To safeguard your account, please consider changing your password. It would be even better to take the additional step of enabling 2 Factor Authentication (2FA) on your BARF account. Read more here.

Sell home or rent out?

Havent read responses yet BUT I did just that. Wife and I decided not to sell my townhouse that has more than doubled in 10 years. Selling and cashing out, putting that $$ toward a larger house is a great idea BUT that would mean buying a $1.5m home and that payment is nuts without borrowing from a parent. Plus it eliminates passive income now and essenttially forever.

I'm positive about $1100 a month minus write-offs for maintaining it. That made renting a larger house down the street more palatable.

If we want, we can take out up to $450k I think with a HELOC an the rent would still cover it.

The only issue now is in 1 more year, we will be out of the window of selling and avoiding cap gains.

I think the passive income is better though. It does mean we may not be able to buy locally for awhile.
 
dravnx said:
I was an absentee landlord for a few years. It sucked. I won't be a landlord again unless I was in a position to keep an eye on my property. There are great tenants out there but one bad one can wipe out years of profit. Gambling at a casino has better odds.
Click to expand...

I don't agree with that. Vetting tenants is the key. My tenant after intervieiwieng about 6 is great. I feel she plans to be there for years.
 
I'm not sure about your numbers, but when I looked at my 6 units in Texas, they have been a better ROI than the market. YRMV.

A good management company solves the head aches.

For tax purposes, rental properties lose money on paper because of depreciation, etc., so you will carry over a lot of losses for a long time.

Here on BARF when we discussed retirement, having passive income from rents is a lot more comfortable for people in retirement than having to sell stocks.
 
one other thing that nobody mentioned, you could also try to make it a corporate rental. I have a friend in Berkeley who only rented to visiting professors, I have 2 neighbors that only rent to visiting nurses. Gas, aviation and other large companies often need short term rentals as they relocate staff. Just a thought, I'm guessing the quality of renters is better too.
 
One thing I haven't seen mentioned is the loan: if you're currently using a VA loan for the mortgage you'll have to re-finance if you turn the place into a rental. VA requires that the home be your principal residence.
 
Alan_Hepburn said:
One thing I haven't seen mentioned is the loan: if you're currently using a VA loan for the mortgage you'll have to re-finance if you turn the place into a rental. VA requires that the home be your principal residence.
Click to expand...

While it does have to be your primary residence for the loan to fund, afaik after that you can do what you want. You can't have two VA loans out at the same time for the reason you mentioned so OP would need to either pay the loan off or do a traditional loan if he plans to buy again and the current VA loan is still active. Maybe can have fha and VA at the same time but I'm not sure about that.
 
I'm happy to be a landlord here in Santa Rosa as all of them are close by so no property mgt needed.

I'd not feel nearly as comfortable with far away rentals to be honest.
 
JesasaurusRex said:
While it does have to be your primary residence for the loan to fund, afaik after that you can do what you want. You can't have two VA loans out at the same time for the reason you mentioned so OP would need to either pay the loan off or do a traditional loan if he plans to buy again and the current VA loan is still active. Maybe can have fha and VA at the same time but I'm not sure about that.
Click to expand...

Total disclaimer it's been a while and this is not advice lol
 
jh2586 said:
I'm deeply conflicted in this semi-volatile market as I am researching several pros and cons to both. I purchased a home in a very nice neighborhood in Ft. Worth, TX back in '19 for $220k (4 bd, 2 bath, 2 car garage, 1908 sq ft) that my family and I currently reside in. It's now worth around $330k and climbing. Active Army and currently deployed but scheduled to return in October. Gonna then be permanently relocated (no idea where) so capital gains is waived and if prices stay the same, I could see a $120k profit.

I'm extremely cheap nowadays so unless the market is right again, I'll probably just rent until it dips. I can put the $120k into S&P or other money market account until then.

OR

Rent it out? Mortgage with tax, HOA, etc.. $1500. Rental prices going for $2300-2400. Take around 8% for property management and I'm pocketing around $700 monthly for repairs and such.

SIDE NOTE: The Bay Area is a potential duty station as I might go recruiting.

TL;DR: Go for $120k profit to potentially invest in something bigger or rent out with $700 extra in pocket monthly on a growing investment? Active Army and must move out at end of year. No capital gains on sale

:dunno
Click to expand...


Wouldn't renting be the best idea.... the whole someone else paying your mortgage is sweet. Being about to cash out refi that and give yourself a untaxed pay day ever few years is pretty awesome.

every few years give your self a 60K payday.
 
Last edited:
Jammer said:
Renter across the street completely ruined the rental house and fought eviction for over a year; he really knew the system and exploited it at every turn. Poured concrete into the toilets, sinks and bathtub and let his dog shit and piss in the house. A real piece of work.
Click to expand...

Is it possible to get "renters insurance" to cover vandalism damage like this?

It seems to me that having rentals is something that scales pretty well to several properties. There seems to be that initial bump of complexity, dealing with the tenants and repairs and what not, but once done, adding a couple more isn't a real burden, and eases the sting have the "all eggs in one basket" of having a single property.

That doesn't mean it necessarily makes sense to rush out and buy several properties.

It also doesn't mean I necessarily have any idea what I'm talking about.
 
Alan_Hepburn said:
One thing I haven't seen mentioned is the loan: if you're currently using a VA loan for the mortgage you'll have to re-finance if you turn the place into a rental. VA requires that the home be your principal residence.
Click to expand...

I actually have researched this extensively. The only requirement for a VA to be funded is your intention of primary residence at the time of purchase. In other words, I didn’t initially take out a VA loan with the intention for rental property as passive income. I bought the home and lived in it for at least 3 years so proving it is easy.

JesasaurusRex said:
While it does have to be your primary residence for the loan to fund, afaik after that you can do what you want. You can't have two VA loans out at the same time for the reason you mentioned so OP would need to either pay the loan off or do a traditional loan if he plans to buy again and the current VA loan is still active. Maybe can have fha and VA at the same time but I'm not sure about that.
Click to expand...

Most veterans (key word) can only have 1 VA at the same time, however, for current service members, a set of PCS orders allows you to take another VA loan provided it is still within the lending limit (like $550k total). I have used $220k so I still have up to $330k available for me to finance through VA. I can also opt to finance more but would have to pay 20% down on the difference only.
 
120K in S&P?

How long will it take for that to net you 700 in interest each month?

What if the market tanks?

If current rental prices will net you a guaranteed 700/month (take out 25% for emergency maintenance, it's still $525/month if you properly vet your tenants).

Of course all of these numbers are made up, but if it were me, I'd hold onto it.
 
I would keep it. There are good renters out there. But you have to offer a reasonable price. I rent now for 1/3 the cost to buy the place I am in.. that is a no brainer. The owner paid the house off long ago. The previous tenants were here 15 years. He remodeled after they moved out (covid allowed them to move to Nevada and keep their jobs). Then left it empty for about 4 months scared he would end up with dead beat squatters. Then he listed it for 2 months before we found it. He was very picky about who he rented to but he could be because he could easily get another 15-25% rent for the place.

He's not trying to pull in every last dollar and realizes he can be selective in who he rents to when he prices a place less than top dollar. I liked that he had the previous tenant for 15 years. So far he hasn't raised the rent and our lease expired about 5 months ago. He is just happy we pay on time. He owns about 8-9 other houses in the south bay and so he already had bad experiences with evictions during COVID. He wants us to pay on time and not trash the place and I want him to not boot us out or raise the rent $500-1000/month so I pay on time and don't trash the place. It's mutually beneficial. He doesn't have to worry about his place and I can justify not buying when the rent is as cheap as it is.
 
If I have learned one thing living here and retired, using money as a primary metric for decisions is not very good for other things like mental health.

Had I not sold my house in Cotati during the low market of 2012 for $440k (a house worth every penny of $650k then) and was renting it out the last 10 years, I would have been able to charge $3k/month rent back then (not enough to cover the nut) and probably more like $3500 to $4k/month now. $950 for that apartment in the back.
Even if breaking even over the last ten years I have no doubt that house would sell in the $900k range today.
Seems like a good deal based on $$$ right?

The mental anguish of dealing with not knowing what is happening with my investment and the two groups living there would have been murder.
The solice of not having that on my plate is priceless.
 
DrSwade said:
If I have learned one thing living here and retired, using money as a primary metric for decisions is not very good for other things like mental health.

Had I not sold my house in Cotati during the low market of 2012 for $440k (a house worth every penny of $650k then) and was renting it out the last 10 years, I would have been able to charge $3k/month rent back then (not enough to cover the nut) and probably more like $3500 to $4k/month now. $950 for that apartment in the back.
Even if breaking even over the last ten years I have no doubt that house would sell in the $900k range today.
Seems like a good deal based on $$$ right?

The mental anguish of dealing with not knowing what is happening with my investment and the two groups living there would have been murder.
The solice of not having that on my plate is priceless.
Click to expand...

X2

March of 2020 I told myself "thank God I just sold that house" :laughing
 
I have a rental thread in here somewhere. You can look at what a tenant from hell can do to a property and what an eviction process might look like.

I think total damage was $150k. Been about 10 years of garnishing wages. I think we’ve recovered all of $20k :laughing
 
Yakoo752 said:
I have a rental thread in here somewhere. You can look at what a tenant from hell can do to a property and what an eviction process might look like.

I think total damage was $150k. Been about 10 years of garnishing wages. I think we’ve recovered all of $20k :laughing
Click to expand...

And most people will read these threads and say it won’t happen to them. It is admirable that people want to see the best in others but damn it hurts. Fool me 3,456 times, shame on me.
 
You must log in or register to reply here.
Back
Top