Here’s a situation for yall experienced RE investors/landlords:
Bought a 2/1.5/1300sqft condo for $360k two years ago (relevant because we won’t get hit with taxes if we sell and thus aren’t chained to it anymore). Just redid the upstairs bathroom with new tile, new bath/surround, new vanity, toilet was new so we reused it. Had hardwoods downstairs, and I put new ones in when we moved in upstairs so it’s 100% hardwood or tile now. Kitchen was redone a few years before we bought (granite, tile, backsplash, new SS appliances) Zestimate (yes, grain of salt, I know) says $400k. I totally disagree with that, and other estimate sites are a bit more conservative, in the $375k range. Rents for these kind of places are going for about $2500, give or take.
We are thinking that we’ll rent the place out and add the condo to our retirement portfolio as we intend on buying a house within about an hour radius, within a year or two. That means we’d have been here for about four years at that point but it means we have about three years of rentability before we’re now chained to it from a tax perspective (2 years lived in of last 5).
Rent or sell? Monthly nut is about $2900 PITI+HOA. If we rent for $2250 (to undercut the market and thus have a large tenant pool (hopefully)), we’ll about break even after taxes, I think. Any more than that is just gravy. I realize maintenance is a real expense, but I rationalize that by saying if the hot water tank blows up while we live here, we have to replace it. So the same holds true for that expense if we rent it out.
In the lower NY area, I believe rental margins are significantly lower than most other places in the country. I’d be happy breaking even, since it means I’m gaining “free” equity. However, a positive cash flow situation is attractive, of course.
Again, rent or sell?
In my neck of the woods this wouldn’t be a winner. Rents are too low even before figuring in HOA fees, taxes, insurance, repairs, vacancies etc. Plus avoiding taxes nice is a nice plus. But the numbers are always regional and I deal in lower priced properties that often give us a larger percentage of return. In my case I would sell then try to find a rental that the numbers work on. Good luck!
I’d agree with CajunDavid. If the rents don’t cover the PITI+HOA and then some then it’s generally not a good candidate for a rental. Right now you have some appreciation but markets turn and then you might get stuck with an alligator.
Must have positive cashflow and some cushion.