Leaving area with no plans to return -- sell or rent house?

[Anonymous]

I have a house one block from a metro station. 2000 sq ft, 4 beds. If I sold today, I'd probably pocket $200K after commission was paid (likely 50K more but being conservative here). The selling price would be $80K more than I paid for the house (again likely more but being conservative).

Pros of selling now:
1) Huge down payment for a house in the area I am moving to.
2) Avoid capital gains since selling the house after the 2 out of 5 years rule is up will mean paying capital gains unless I can do a 1031 exchange into another rental.
3) No costs of future repairs on this house as a rental, missed months of payments during lease turnovers, etc. If I held as rental, no trying to manage the selling process from afar.
4) Great sellers market, guaranteed sale at a high price.

Pros of holding as rental:
1) This metro is just now starting to redevelop with multiple projects recently completed, underway, or about to be.
2) After property management fee, will profit $500-$600/month.
3) I don't want to be that guy who sold a place in Clarendon in 1999 and regrets it to this day. I keep coming back to the fact that this is 1 block from the metro in the capital city of the US.
4) If in the off-chance I do move back, I have a property to move into.

I know many people say to sell if you do not intend on coming back. But I have other rentals in the area under property managers and it's already as if I'm not in the area. Never visit the houses, never see the managers. I trust them and they take good care of my properties. So I am not worried about that aspect. Especially with a house like this with the rent price it demands. You're going to get some pretty decent tenants.

Opinions?

[Anonymous]

I would absolutely keep it, but my perspective is that of someone who's looking for a rental property to invest in right now. Would you have a down payment for something to buy where you're going?

[Anonymous]

You're crazy if you don't sell!

I own two rentals, its not easy. You have to think about the carrying costs if its every vacant. the repairs on that WILL happen. You WILL get a text one day while at work that says "....HVAC isn't working.." I know because it just happened to me yesterday. and the day before that it was "...wow, microwave just blew..". Last year alone we repaired/replaced dishwasher, HVAC replaced and repaired, garage door, deck, cement steps etc.

congrats by they way on gettin' the hell outta here!!

[Anonymous]

Since you are already in the investment property business, you are clear on what the means.

The real financial question is what is the cost of capital for getting a mortgage at your new location and what are the invesment returns with assumptions.

So - after property mgmt fee, you think you are netting $500 a month (6K a year)

If you had 50K that you needed to pay capital gains on, you would recap this in less than 3 years.

[Anonymous]

Anonymous wrote:Since you are already in the investment property business, you are clear on what the means.

The real financial question is what is the cost of capital for getting a mortgage at your new location and what are the invesment returns with assumptions.

So - after property mgmt fee, you think you are netting $500 a month (6K a year)

If you had 50K that you needed to pay capital gains on, you would recap this in less than 3 years.

huh...wuh...????

[Anonymous]

Sell.

[Anonymous]

Sell.

Your neighbors, ok all neighbors, would prefer to have on site homeowners to keep up the outside of the house (yardwork, flowers, paint, fences) and it's hard to create community in a SFH neighborhood with tenants moving in and out.

[Anonymous]

I would sell-- both for the cap gains exclusion and to avoid being an out of town landlord, but if you already have rental properties then I guess I'd keep it unless I really needed the downpayment.

(I assume the rental properties are all in the same jurisdiction-- being a LL in VA isn't exactly the same as being one in DC)

[Anonymous]

Well, if you think the area is gentrifying, would it make sense to rent it out for a year or eighteen months, then have the tenants move out and out it on the market? Then you could still get the cap gains but have it appreciate more.

I'd be up front with the tenants that you plan to ask them to move after a yar if you did this, tho.

[Anonymous]

Anonymous wrote:Sell.

Your neighbors, ok all neighbors, would prefer to have on site homeowners to keep up the outside of the house (yardwork, flowers, paint, fences) and it's hard to create community in a SFH neighborhood with tenants moving in and out.

Why should the neighbors have a say? If it's one block from the Metro, how stable is the long term viability of the neighborhood anyway?

OP, if you have other rental properties, I'm guessing you have the expertise, either on your own or hired, to know what makes the most sense. Are any of your other rental properties better poised for selling?

[Anonymous]

If you can pay the mortgage with the rent, keep it for the tax deduction.

[Anonymous]

Sell. Market is high, and 200k is a very nice bird in the hand.

[Anonymous]

Keep it

[Anonymous]

Near what metro? Is it a house or a townhouse?

[Anonymous]

OP here. It's a SFH. That's the kicker here. 4 bd SFH 1 block from metro. There is definitely value here. I won't name which one.

And yes, 1 block from metro, it's mostly rentals anyway. Not like there is a great sense of community with stable owners.

I am undecided at this point. Not having the 200K as a downpayment on the next house, means that I have to buy less house than what I'd prefer. But willing to take that sacrifice if it means keeping the current as rental is long-term a better financial choice.