Reply to Should I sell my house or rent it out?

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Reply to "Should I sell my house or rent it out?"

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[quote=Anonymous]I'd rent it out if:

1) it doesn't need a lot of work now
2) you dont anticipate needing a lot of money in the next 5 years (eg college or retirement)
3) the location is sufficiently desirable that you will easily find quality renters and you can charge enough to make at least the same return as you would investing 650 k (minus transaction fees) in the market. What's the current rental estimate?

We are renting out a parent's house across the country. The rent is 9500. Mortgage (small) tax and insurance is about 3k. We pay 500/mo in management fees, plus the maintenance aint cheap. Probably bring in an average of 5800/month in profit.

a few things: insurance is higher (esp fire insurance....maybe because its california) and additional renter insurance that covers stuff we didn't have when it was owner occupied. we have to pay taxes on rental income but can deduct a lot of expenses from it. the capital gains exclusion wont really come into play because we plan to keep this until parent passes away and until then the monthly rent covers all expenses for the home and most of the care parent needs.  We probably could have sold, invested those funds and probably come out the same but parent wasn't ready to see it sold and to be honest inheriting the house at step up basis saves around 450k in capital gains tax when we do sell it . However, we also put 165k into renovations to make it rentable for this particular market, otherwise we would have sold as is which was most likely a tear down--older ranch home in a neighborhood of mostly renovated 4-8 million dollar homes).

I found an online rent vs sell calculator which is worth looking for. It takes into account a lot of factors. [/quote]

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