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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]We want to get a slightly bigger house and to live in a better neighborhood with better schools.  So - do we sell our place or rent it out?

Mortgage remaining: $160k
Home value (conservative): $350k
Monthly PITI: $1k
Likely rent: $1800-$2000
HHI: $160K

We have about $50k saved (in actual $, not equity) towards a down payment on a new home.

WWYD? Take the monthly rental income, and take the long term approach of the house as a long term investment? Or take the money and run - putting a bigger down payment on a new house?

Just curious what people's thoughts are.

[/quote]

Don't know about the DC tenant laws but we rent our former home in VA and it was the greatest thing we ever did.  The rent is similar to yours ($2000/month) monthly payment similar to yours ($1000) and we take the funds and prepay early our principal on the mortgage.  We've had only 2 tenants in the last 5 years and the current ones just signed an 18 month lease (extending the 2 years they have already been there).  It would be great if we continue on path and are able to have it paid off within 5 years which would be 12 years early.[/quote]

I am in the same situation as the OP, but I am in VA.  We did the calculation and decided not to rent it out.   Here's reason.   Let's say the house is worth $350K and rental income is  $2,000 per month, after expense (property taxes, insurance, HOA, repair, etc), you get about $18,000 per year (you may not get this much if required more repair throughout the year), then the return of investment is about 5%.  Yes, I know the house can appreciate over time and tax deduction of the depreciation value of the house.  Yes, the house can lose value as well (as in 2008 housing bubble) and yes, you will pay tax when you sale your house in the future because of the depreciation of the tax you take over the years.[/quote]

That's all true...it will depend on the history of the property.  We created a small corporation so all expenses are run through the company.  Our house has only increased in value (even with the bubble bursting, we went from a $540k value to a $420k value, but bought it for $200k so we were still okay/pleased).  We put money back into the home to not only keep the renters happy but also to increase our equity  (fair market value increases), decrease our net taxable income on the rent, give us the write off on taxes, etc.  So by adding hard woods, new deck, etc., we've been able to have the taxable income at about $10k/year or less, property looks great, great tenants and it is a fabulous investment for us.  [/quote]

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