It makes financial sense to do it yourself. Sure - it is way less expensive. But OP says she has kids and CH is, depending on time of day and close in CC, at least 35 min to CH each way. Personal preference- but I wouldn’t want to spend the time and think it is worth paying someone else to do so. Again, personal preference and it is an incurred cost that makes holding a property less financially palatable.

Anonymous wrote:Are you thinking of keeping the house because you're emotionally tied to it? If yes or no, get a property manager. Are you keeping it because it seems like a nice way to earn monthly spending money? If yes or no, get a property manager.


Chevy Chase MD is too far from the Hill and things will come up, even with the best of tenants to do it yourself. Plus, if you have a terrible tenant - which you may - you'll have fewer sleepless nights knowing someone else is dealing with the issues they cause.

D.C. is no picnic. I've had awesome tenants and one incredibly sour lemon.

Disagree with this "get a property manager" stuff. If you are renting out only one property, it generally makes more sense to manage it yourself. Chevy Chase is not "too far" at all.

There is some satisfaction in holding property - emotionally it feels good to have tangible assets in this topsy turvy environment . The numbers may not work perfectly though - assume 5% in the market for the value of your property against net rental income and the depreciation charge you will take when you eventually sell.

We have a rental and we would have done better in the market. But, for now, we are holding because, well, not everything is about maximizing the profit, we aren’t operating at a loss and we are not bullish about the next 10 years in the market.

"we think we can rent it for more than mortgage, taxes, upkeep, etc"

That is irrelevant. The question is whether your return from renting it (rent + appreciation - taxes and other expenses - the value of your time and effort) is greater that the return you'd get from selling it and investing the proceeds in something else, such as stocks.


"and would love to diversify our portfolio"

You already have a new house, and the future return of that house is going to be highly correlated with return on your old house. So the question here is whether how much you want in real estate (one or two houses) vs how much in stocks and other financial instruments.

I understand this doesn't answer your question, but those perspectives might explain where your advisor is coming from.

Are you thinking of keeping the house because you're emotionally tied to it? If yes or no, get a property manager. Are you keeping it because it seems like a nice way to earn monthly spending money? If yes or no, get a property manager.


Chevy Chase MD is too far from the Hill and things will come up, even with the best of tenants to do it yourself. Plus, if you have a terrible tenant - which you may - you'll have fewer sleepless nights knowing someone else is dealing with the issues they cause.

D.C. is no picnic. I've had awesome tenants and one incredibly sour lemon.

Anonymous wrote:Your financial advisor is right. A single property is not diversification. You want a REIT if you’re looking for diversification.

This statement is not necessarily correct.

sell and put the money in the new house.

Your financial advisor is right. A single property is not diversification. You want a REIT if you’re looking for diversification.

We moved out of our home in NoVA a couple of years ago and rented it out for two years, and we just sold it.

We too had a 2.5% mortgage and that motivated us to hold onto it and rent it out. We rented it without a property management company -- they all wanted a month's rent to find a tenant and a month's rent to manage it, and that would have really cut into our profits. DH is handy and fixes things himself, so we were able to manage it pretty easily. We used Zillow to find a tenant; that was a lot more work than I expected, but we found a good one and they stayed for a second year. It was so easy that my DH said renting the house out felt like "printing money" lol.

But we did end up selling. Mainly to avoid an eventual tax hit on appreciation as we knew we didn't want to rent it out indefinitely. But also because renting is, generally speaking, a risky business. Even great tenants can end up not telling you about a huge maintenance issue that they caused, or lose their job and stop paying rent, or whatever. Being a landlord isn't too much work when you have a property that has been well-maintained and the tenants are good, but stuff does still come up (we had to replace the hvac unit, which we knew was on the horizon, but it was a hit). I did like the idea of having the money invested in real estate given the craziness in the markets, but we also have the house we live in now and another one that is payed off to boot, so in the end that didn't push us over the edge into keeping it.

Finally, we are in VA. As you pointed out, laws are less landlord-friendly in DC, but it sounds like you are familiar with that.

Lots to consider and no easy answer.

I bought a 2br investment condo several years ago in a good school zone. It's gone about as well as I could imagine (mostly decent tenants, fairly reasonable maintenance and repairs, adequate property manager) but I would have been much better off investing in the stock market and with less stress.

Will you have a mortgage on your new home? If so, using the proceeds from selling your Hill house to reduce your mortgage principal is basically a guaranteed return at whatever that rate is (you can factor in the mortgage interest tax deduction if you want, but generally it's better just not to pay as much mortgage interest!), and that is probably better than what you'll get renting out your Hill house, with less risk.

Do you want to be a landlord?

Are you handy? Will you pay a property manager?

How much money will you make after repairs (note that tenants can be hard on houses), higher property taxes (no homestead deduction), vacancy, nonpayment, etc.?

Do you understand DC landlord-tenant law (at least read the landlord-tenant survival guide on the OTR website)?

Are you ok losing the exemption from capital gains if you do decide to sell when you haven't lived there for two of the past five years?

It's one thing to rent out your English basement -- we do that -- but it's another thing to rent out another property. We've done it and have always had good tenants, but the bottom line is it's a major hassle and the return just doesn't keep up with the market. Especially now, I'd guess, because home values in DC aren't likely to appreciate as quickly as they have in the last 10-20 years. And even if they do, you'll be taxed on the gain and have to pay a depreciation recapture tax as well.

I'd listen to your financial advisor on this one, and leave real estate investing to the actual professionals.

Anonymous wrote:We are moving to Chevy Chase MD (just closed on a house) and are trying to decide if we keep our house on the Hill or sell it. We are leaning to keeping it- we think we can rent it for more than mortgage, taxes, upkeep, etc and would love to diversify our portfolio. Our financial advisor would prefer we sell. We obviously trust him and pay him for his insight but I’m looking for info from people who have moved and kept their previous property. Did it work out? Did you hire a management company? Did you rent for a bit then end up selling anyway?

We rented out the basement apartment a few years ago and it was fine, we found great tenants. We also know that DC has really strong tenants rights.

It’s tough to give up a 2.5% mortgage so we are seriously debating. We have 20 more years on the mortgage and cash flow isn’t a problem (we don’t need renters constantly to make it work- the house can’t sit empty for six months but 3 months would be fine).

We may move back here after the kids are grown but maybe not.

Advice?

can you provide the exact reasoning of your financial advisor to sell the property?

We are moving to Chevy Chase MD (just closed on a house) and are trying to decide if we keep our house on the Hill or sell it. We are leaning to keeping it- we think we can rent it for more than mortgage, taxes, upkeep, etc and would love to diversify our portfolio. Our financial advisor would prefer we sell. We obviously trust him and pay him for his insight but I’m looking for info from people who have moved and kept their previous property. Did it work out? Did you hire a management company? Did you rent for a bit then end up selling anyway?

We rented out the basement apartment a few years ago and it was fine, we found great tenants. We also know that DC has really strong tenants rights.

It’s tough to give up a 2.5% mortgage so we are seriously debating. We have 20 more years on the mortgage and cash flow isn’t a problem (we don’t need renters constantly to make it work- the house can’t sit empty for six months but 3 months would be fine).

We may move back here after the kids are grown but maybe not.

Advice?