Profile picture for ethidda

Should I rent or sell my house?

I bought a cute house in Ballard with an FHA mortgage about a year ago. It's a SFH, 3 bed, 1 bath, outdated kitchen (though I replaced some appliances), and a detached garage.

Now, due to other circumstances, I will probably be moving to a different part of town. If I sell it, I will get basically nothing after the agent fees, etc. If I rent it out, I'm able to just about cover my mortgage payments, and possibly a tiny bit more. I do have the finances to cover the difference between the rental income and my rental payment if the renter is not able to pay for some reason. I'm thinking renting it out might also be a good idea for tax reasons.

I'm wondering if I should rent it out or sell it. People always seem to recommend selling if at all possible, but I have a hard time believing that's actually the case (whether or not I'm an exception). Are there issues I haven't considered?
  • August 27 2012 - Ballard
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Answers (12)

Since you can afford to rent the place and have an emergency fund in store in case your tenants don't pay then I would say you are in a stronger position to rent as opposed to selling. Home prices have depreciated over the last couple of years, and remain low. You may not get the best return for your investment if you sell in this real estate climate. Assuming the housing market will keep trending slowly but upward as it has been lately, it may very well be worth the wait.  
  • February 05 2013
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Profile picture for blub blub blub
Within the next 3-5 years you should see a substantial ROI for any property that you hold right now.

Really?  You know this how?
  • February 05 2013
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I highly recommend renting this property out especially if you are in a position to afford it. Home prices which tend to be much more consistent then stock market or other investments are in the rise. Within the next 3-5 years you should see a substantial ROI for any property that you hold right now. In addition rental demand is very high due to tighter lending policies at the banks.
  • February 05 2013
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There is a huge increase of rental demand in the last year.  Contact a real estate agent that can assist you with the rental process and get you a responsable tenant until the home get some equity and you can be ablke to sell.
Best of Luck,

Maria Cipollone

  • February 01 2013
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Profile picture for blub blub blub
Usually you break even between 2 and 3 years of ownership,

Is that right?  Try telling that to people who bought in 2008, 2009, 2010.  I would be most would disagree with that statement.
  • February 01 2013
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Usually you break even between 2 and 3 years of ownership, So after just 1 year, even if Ballard improved dramatically and there is no inventory, you would need a gain of 8% to cover the cost of selling (commission + WA excise tax) which is not impossible at all based on what we currently see everyday in Seattle! 
Not everybody is a landlord at heart so this has to be considered as well. There are bad tenants as well as good tenants too. It's just that sometimes, the phone calls at midnight because the toilet clog could annoy you. Property managers in Seattle will charge 10% to take care of these calls.
So I would say: do your homework, get a real market analysis from real Seattle agents who actually sell houses (check them here, check their sale history on their websites, reviews, etc....), do the same for the rental value and finally talk to your lender. 
You can't make a decision that big without a complete picture and real data. Once you have that it will be easier for you to go one way or the other.
  • February 01 2013
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Profile picture for apb3304
What nobody has mentioned is the fact that being a landlord is a nightmare for many people.  Just search for "I hate being a landlord".  You could also search for "I love being a landlord", but if you actually read what you find, you'll see that almost all of them are actually written sarcastically - meaning almost everyone hates being a landlord.

If you enjoy termites, toilets and trash, by all means be a landlord.

Keep in mind that you'll still be responsible for repairs and maintenance.. and those late night calls when the tenant needs something.

 And, in the event you do decide to farm out the task to a management company, don't forget to factor in their fee in your calculations - plus the time you'll need to spend managing the management company.  You'll find that most management companies are great at selling you their services, and collecting money if the renter actually sends them a check.  Good luck to you when the renter decides not to pay.  What will you do then?  Evictions can take months and months if you don't know what you're doing or hire the wrong eviction attorney or company.  And renters are often so "happy" they've been evicted that they take it out on your property.  One malicious tenant can cause you $40,000 in repairs when they steal your air conditioner(s), heater, light fixtures, stove, cabinets, sinks, toilets, etc. gunk up your pool and then take a sledgehammer to your walls.

Oh and don't forget to add in the vacancy factor when you do your calculations - something else most of the others "forgot" to tell you about.

It's not all doom & gloom, some people get fantastic tenants that pay the rent on time and live there quietly and cleanly for decades.  Just don't count on anything one way or the other.  

Be prepared is my motto.  It should be yours too.  Hope for the best, expect the worst.  First run the numbers, do your research and then do some soul searching.

Good luck.

  • February 01 2013
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If you can rent it and have the renter cover your mortgage payment it is a no brainer to keep it as a rental property. Your renter will be paying into your equity and future each month, it will be an investment. 
  • January 30 2013
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Hi ethidda,

Contact a tax professional, as there are a lot of benefits to renting a house out before selling it.

Good Luck,

Nikki
  • October 25 2012
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If you sell, and considering you only invested in your house about a year ago, you may take a loss after real estate fees and taxes. Much also depends on your specific situation, finances, goals, etc.  Also, be sure to consult with your accountant regarding your finances and tax ramifications. It would be a good idea to have a real estate broker do a market analysis for you and provide a net proceeds estimate to see how you would do should you decide to sell. The real estate broker could also perform a rental analysis to see what you might be able to get in monthly rent. When you're able to see both scenarios, including other factors, you can then decide which is the best path for you and your goals.

  • August 27 2012
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Profile picture for nwhome.us
Yes, no one will recommend selling a home after only a few years of ownership.  Selling usually costs about 9% of the agreed upon sales price.

With what you've described, I'd recommend renting it out; that's providing you don't mind being a landlord.  If you are an inexperienced landlord we are a property management firm and can do the rental for you and qualify the renters. In many cases the expense is worth the peace of mind.

Contact me if you'd like to know more about the service.

  • August 27 2012
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Profile picture for daveskow
in my opinion - selling is likely the best bet  if you can indeed  breakeven  after  all  selling eexpenses factored into the  equation

factors to take into account - the  management ( hassle )  of the property if you were to rent it ....the negative hole it will eat in your pocket  when it sits vacant for a month / or two  , or more in the future

  • August 27 2012
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