Sell vs rent: could clear $700/month

[Anonymous]

Anonymous wrote:Calc your yield, if it is better than your stock portfolio returns, go for it.

Current (but new landlord here) - how would I calc my yield? We receive 2450 and our monthly mortgage +HOA+repair costs is 2200. Assume 500 of that is principal.

[Anonymous]

Anonymous wrote:We've rented our rowhouse on the Hill for 16 years. We'll pay off the mortgage next year -- or, rather, we'll toast the tenants who paid it for us. Then we'll enjoy about $3,500 a month in revenue... forever.

Rent it.

Sweet. This is what we, not OP, are hoping to do with our row house. Currently rented to net $1100/month after taxes, insurance and mortgage. After we build up a bit of cash to cover cost of repairs etc. Do you recommend putting extra towards mortgage? We have a 30 year fixed but would love to have it paid off in 15 or less.

[Anonymous]

I have heard that you shouldn't rent expecting to make a profit based on the rent you collect. That the real payoff in renting is the money you make when you sell the building much later. That was certainly true for us. We barely covered our costs renting but we sold the house 19 years later for $175 k more than we bought it for.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Some condo assns have rules against renting because some lenders don't like offering mortgages if most of the units in the building are rented.

+1. Something that would make me hesitant too is that about 6,000 brand new condo units are in the pipeline to be built in the District shortly. Plus possible cuts to federal spending. Bad recipe for DC.

Yes, I think this is a concern. On the other hand, there are people constantly coming into the District for just a few months who are willing to pay a good price for a temporary rental, especially if it's furnished. However, that requires finding new tenants at least several times a year, which is a pain.

OP, are you on a neighborhood listserve? I live in Capitol Hill and I regularly see people looking for places for friends and family, both short-term and long-term. If your neighborhood list has a lot of inquiries like that, that's a good sign that you'll be able to keep things rented.

But yeah, I don't know what is going to happen with sequestration. Big question mark!

[Anonymous]

Anonymous wrote:

Anonymous wrote:
I think renting a condo is much safer than renting a house, in terms of potential costs and problems.

Agreed. I have a rental house and a rental condo. The house just has a lot more things can go wrong, which are my responsibility.

Not the case for us. We have a condo and a rowhouse for rent and the condo has been a PITA with all sort of issues, we are getting a large assessment for repairs and condo fees keep rising taking away a good chunk of our profit. Condos only cost more over time in maintenance and repairs, plus whatever BS neighbors do, if you get flooded, good luck. On the other hand, rowhouse has had fewer problems, and we don't need to deal with the board and their BS, we get to choose our own people to fix the problems for the price we want to pay. Plus, zero condo fees.

OP, I think if your rental is in a very desirable area, in terms of having a steady supply of renters, you will be fine.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I prefer tangible investments over stocks but that's just me

Me too.

+2

We've been renting out our DC condo for 3 years now. There have been minor fixes, but they haven't been a big deal. The condo will be paid off in 4 years and I am looking forward to having a steady stream of "passive income."

Two things to think about: 1. If you sell the property now, will you have earnings form that sale? If so, you may want to sell in the next few years in order to take advantage of the 250k (single person) or 500k (married) capital gains relief. 2. I love renting out our apartment, but DC "business" tax on the rental income is about 9% -- on top of the federal income tax I pay on it.

This is just on your profits right? Not on the total rental income? So for OP it would be $700/mo?

Yes, but profits include any money that pays down the principle of the loan. We're left with $400 a month from our rental income after we pay mortgage, taxes etc. The principle payment each month is $1,000. So we are taxed on a profit of $1400 a month, even though only $400 of that is cash.