Rent or Sell - Moving Out of State

I have some questions regarding renting or selling a current house when moving out of state.

I purchased the house about 4 years ago. No down payment. Fairly good rate (3.5%) I've paid off about 20k on the 30 year loan.

I'll be relocating out of state and need to figure out what to do with my house. Selling is very appealing since it's appreciated another 40k over what I bought it for, but a lot of people say to rent.

Selling it, to me, is the easiest option. I don't have to deal with renters or repairs. And I get a nice chunk I can either invest or use as a down payment when I decide to buy in my new location. I never plan on owning multiple properties and renting them out as my income source.

If I do rent I can probably list it for a couple hundred over what my mortgage is. So not a huge amount.

That should be enough backstory I hope. What do you think...rent or sell?

 

If you don't want to own rentals, I wouldn't. I currently rent my old house out, and I have great renters. I still have to go there for maintenance. If you're out of state, you'll have to pay someone to do that. Also, when you go for another loan, the banks probably won't look at your rental income, possibly reducing your buying power...

Mike

 

If you get a renter and sign a lease, you can use that as leverage with another mortgage.

 

Is this place your dream home or do you intend on returning?

 

I say sell it.

 

Your expenses will rise being an out of state owner with a rental. A management company, professional services to do things you might do yourself come to mind. Also, if you are in a state that discounts your primary residence for property tax purposes, your taxes will rise. And if your state has a 'save our homes' cap on property taxes, you'll lose that. Possible for the insurance to rise due to being non-owner occupied. So, the rent might cover the mortgage, but maybe not all expenses?

It's also possible your current mortgage specifies owner occupied. They are out there. You might check that as part of your due diligence.

If you do rent, you'll also have a more complex tax return which may or may not require an accountants assistance.

Life is simpler if you sell. Just figure out the time frame you have to reinvest (used to be 18mo?) to avoid capital gains from your appreciation.

No, I'm not a realtor or accountant. But my career moved me 5 times or so, we've owed 3 homes at once (for like 4 years), and currently have two homes with one that has been rented for 6 years.

Our reason for renting the one is that the market was down 6 years ago and someone knocked on the door and asked if we would consider renting (they knew we were going to move). We struck a deal. The home is spotless, the rent comes 2 days prior to due date, every month, and we've only had normal repairs. So it's been ok. But because the market has recovered, when this tenant leaves, we'll sell.

Or I'll gut it and make it a big garage workshop man cave.

Don't tell Mrs. Clearwater I said that. It's really her house.

 

I like the location. It's not a bad house. But not even close to dream home.

I bought it when I was separated from my wife. After we got back together (awwww) she said we'd have to eventually buy a different house so it was ours and not mine. Which I can understand.

 

Location Location Location, where is said home in question ? State and City. If it's in a great place for tourist you could rent it long term or short. But like someone else said.

And this

Ultimately it is up to you.

 

Ooooh very good info there!

I agree on the property management doing repairs. I've build a couple houses and do my own repairs (homes and vehicles) so it'll kill me to pay someone to do a repair I can do for a fraction of the cost.

Between what you said and the poster I just quoted, I think selling it is a far better option.

 

It's in a good area for someone to move and live. But no way for a tourist.

 

I gotcha. I live in WFO (way effin out).

 

I say sell it and use the money to buy a new place

 

If you think odds are you will want to return to where you live now, or if you are unsure, then renting isn't a bad option in that it saves you having to buy a house if you move back.

If not I'd lean towards selling. I think Clearwater summed it up well, plus bone up on your state's tax laws.

My friend owns a condo in SC, which she bought just as an investment 11 yrs ago at age 22. Pays for itself and sticks a little cash in her pocket, but in that case there's also a condo association who handles a lot of the nitnoid stuff that goes with owning.

 

Have u sold it yet?

Tried it with several properties when renting & flipping was my living and I relocated.

Still own 2 units 550 miles away. AND I HATE IT.

IMO, if I'm gonna own & rent I want to live close.

 

X2. With the gov't regs, you can't say no to anyone, and it is a horrible process to evict someone.

There are numerous situations where non-paying renters are about to be evicted, make one month's rent payment, and the eviction timetable is extended another 6 months. They basically get to live there free at your cost, and no telling what damage will occur once they are evicted.

 

This is true and also depends on your state. I live in MA which favors the renter.

We were evicted..not served, and it was retaliation as well. We kept putting the rent in an escrow acct and at the court date even the landlord's lawyer said our requests were more than fair..allow us 3 months to leave I think, and we showed the escrow acct. But still it took 6 months to get done.

 

Probably need to rent your house for 30% more than what your monthly mortgage payment is since you'll probably have to claim rental income on your federal and state taxes. Government needs its piece of the pie.