Anonymous wrote:We are moving out of the DC area and are weighing sell vs. rent options. Facts:

- It’s a SFH in a desirable neighborhood with good schools.
- We pay 2.7% interest on the mortgage.
- Equity is $650K, give or take $100K.
- We don’t know if we’ll return to the DC area or not. Right now odds are 50-50.

WWYD? Will we be able to find good tenants given the economic situation? Rent for 1-2 years then decide? Or take the money and run now? I’m very hesitant to give up the low interest rate. Rent less expenses would in theory cover the mortgage and yield a small profit, but there are many unknowns.

Never sell unless the offer is too good to pass up, like 10 times the value, etc.

You will likely have negative cash flow after you subtract the following:

- vacancies

- property management fees

- taxes

- maintenance

- renovations?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are moving out of the DC area and are weighing sell vs. rent options. Facts:

- It’s a SFH in a desirable neighborhood with good schools.
- We pay 2.7% interest on the mortgage.
- Equity is $650K, give or take $100K.
- We don’t know if we’ll return to the DC area or not. Right now odds are 50-50.

WWYD? Will we be able to find good tenants given the economic situation? Rent for 1-2 years then decide? Or take the money and run now? I’m very hesitant to give up the low interest rate. Rent less expenses would in theory cover the mortgage and yield a small profit, but there are many unknowns.

I am south asian and this is the advice we got- you only need enough rent that it covers your interest payment, that is enough money to justify keeping the property. Think of paying the principle as an investments/savings vehicle. I would add maintenance fees to this but the people I know who follow this advice are refugees the I got here with 20 bucks in my pocket/one suitcase crowd and they are all millionaires now.

I know ppl love to leverage debt for real estate but I must say that the fully paid off commercial property I have that brings in a very tidy sum brings me incredible peace of mind for my old age.

But you can also invest that "sold commercial property value" and bring in a "very tidy sum" and not be tied to managing a property. For SFH it typically doesn't earn you that much. Not worth the huge hassle IMO

This is what I discovered when I did the math on keeping my house. I did not want to manage the property, and the property managers would likely end up with any "profit."

The margins were small even for a home without a mortgage.

I’m in a similar situation in Chevy Chase MD and also 50/50 we would move back. Wouldn’t be able to afford anything close-in at these interest rates if we sold and then decided to return to the area. But also, our current house would not be ideal for our growing family in 5 years without some renovation or addition. So I guess factoring in that cost makes it a wash. Agree with PP about renting in May. Realtor gave us advice that you need to list rentals for SFH in spring as that is when families start looking as most renters are tied to the school year.

Anonymous wrote:

Anonymous wrote:We moved away and sold our house at what we thought was the top of the market. Moved back after a few years, and regretted having sold our home. It was in Chevy Chase Md and we weren't able to afford that location when we moved back.

If you're thinking there's a 50% change you'll move back, my bet is that you're definitely coming back. There's a lot we missed when we were away. Ya don't miss it til it's gone.

This is my worry. If we sell then move back, we would not be able to afford a similar house (in the current market).

- OP

I'm the PP above who held onto the home and now regrets not selling sooner. However, in your situation I think it would make sense to rent out for a year or two until you have a better sense of whether you plan to return, with the knowledge that you are taking on some property management hassle and potentially leaving money on the table (in home equity instead of the markets) in exchange for the optionality. If you return, would you be happy returning to the same home? In our situation, we now also realize that we would probably prefer something different even if we ever moved back to the area as our needs have changed with hybrid work, additional kids, updated financial situation, etc.

Anonymous wrote:We moved away and sold our house at what we thought was the top of the market. Moved back after a few years, and regretted having sold our home. It was in Chevy Chase Md and we weren't able to afford that location when we moved back.

If you're thinking there's a 50% change you'll move back, my bet is that you're definitely coming back. There's a lot we missed when we were away. Ya don't miss it til it's gone.

This is my worry. If we sell then move back, we would not be able to afford a similar house (in the current market).

- OP

Anonymous wrote:

Anonymous wrote:DC or “DC area”? Being a landlord in DC is a pain. VA or MD would be easier.

This is crucial. I’d never be a landlord in DC itself.

The house is in MoCo, MD.

We moved away and sold our house at what we thought was the top of the market. Moved back after a few years, and regretted having sold our home. It was in Chevy Chase Md and we weren't able to afford that location when we moved back.

If you're thinking there's a 50% change you'll move back, my bet is that you're definitely coming back. There's a lot we missed when we were away. Ya don't miss it til it's gone.

If this is important to you, then you should know your numbers. Also, how would you invest the proceeds if you sell.

Impossible to answer without more information.

Anonymous wrote:We are moving out of the DC area and are weighing sell vs. rent options. Facts:

- It’s a SFH in a desirable neighborhood with good schools.
- We pay 2.7% interest on the mortgage.
- Equity is $650K, give or take $100K.
- We don’t know if we’ll return to the DC area or not. Right now odds are 50-50.

WWYD? Will we be able to find good tenants given the economic situation? Rent for 1-2 years then decide? Or take the money and run now? I’m very hesitant to give up the low interest rate. Rent less expenses would in theory cover the mortgage and yield a small profit, but there are many unknowns.

Do you live in Maryland? If yes, you'd have to rent for a minimum of two years. You also need to install fire alarm/carbon dioxide detectors on each floor and allow people to have pets if they say they need them for medical reasons. Same goes for any handrails one might need in the bathroom.

I had a second home and decided to sell it, but that may not be the right decision for you. I interviewed two property management companies during my decision-making process and learned a lot about what would need to be done.

I wouldn't be a long distance landlord and hiring a property manager in place of that would be costly.

As others have said, even the best tenants just don't take care of the place the way you do and small problems are allowed to become big ones. It's been our biggest frustration as landlords.

Anonymous wrote:

Anonymous wrote:We are moving out of the DC area and are weighing sell vs. rent options. Facts:

- It’s a SFH in a desirable neighborhood with good schools.
- We pay 2.7% interest on the mortgage.
- Equity is $650K, give or take $100K.
- We don’t know if we’ll return to the DC area or not. Right now odds are 50-50.

WWYD? Will we be able to find good tenants given the economic situation? Rent for 1-2 years then decide? Or take the money and run now? I’m very hesitant to give up the low interest rate. Rent less expenses would in theory cover the mortgage and yield a small profit, but there are many unknowns.

I am south asian and this is the advice we got- you only need enough rent that it covers your interest payment, that is enough money to justify keeping the property. Think of paying the principle as an investments/savings vehicle. I would add maintenance fees to this but the people I know who follow this advice are refugees the I got here with 20 bucks in my pocket/one suitcase crowd and they are all millionaires now.

I know ppl love to leverage debt for real estate but I must say that the fully paid off commercial property I have that brings in a very tidy sum brings me incredible peace of mind for my old age.

This is a terrible advice. (And being Asian does not add any gravitas to it.)

Statistically speaking, you are better off selling. How much did the house appreciate since you bought it? The only thing that may be holding you back is the 2.7% interest rate on the mortgage. If you want to test it out, rent it for 2 years, then come back and report and we'll be able to give you are more targeted advice. Do not rent it for more than 2.5 years because if you do decide to sell, you need to have lived in the house for 2 years in the last 5 years to take advantage of the $500k federal tax exemption on the gains.

Anonymous wrote:We had a similar decision a few years ago and chose to rent out our home, largely due to an emotional attachment and desire to "diversify". It has worked out ok in that we are cash flow positive and have had good renters, but we would have made a lot more money selling and putting that money in the S&P over the past 5 years. Renters also don't treat/maintain the home as you would and we definitely have more wear and tear than we would have living there. We are now looking to sell as we are tired of dealing with cross-country property maintenance and it is a pain.

+1000

Even if you vet your renters, they simply are renters and rarely care to treat it as well as you would. Unless you plan to come back to the area and live in that home (and are 90%+ certain you will) I would sell, invest the money and purchase a new place that best suits your needs if/when you return.
Rarely do you make more money renting a place than you would investing in the market, plus you have to consider all the work to maintain it/paying a property management company.
Also, it's hard to turn it over to new renters without a gap, so that's often 1+ month of no rent and the losses add up quickly

We had a similar decision a few years ago and chose to rent out our home, largely due to an emotional attachment and desire to "diversify". It has worked out ok in that we are cash flow positive and have had good renters, but we would have made a lot more money selling and putting that money in the S&P over the past 5 years. Renters also don't treat/maintain the home as you would and we definitely have more wear and tear than we would have living there. We are now looking to sell as we are tired of dealing with cross-country property maintenance and it is a pain.

Anonymous wrote:

Anonymous wrote:We are moving out of the DC area and are weighing sell vs. rent options. Facts:

- It’s a SFH in a desirable neighborhood with good schools.
- We pay 2.7% interest on the mortgage.
- Equity is $650K, give or take $100K.
- We don’t know if we’ll return to the DC area or not. Right now odds are 50-50.

WWYD? Will we be able to find good tenants given the economic situation? Rent for 1-2 years then decide? Or take the money and run now? I’m very hesitant to give up the low interest rate. Rent less expenses would in theory cover the mortgage and yield a small profit, but there are many unknowns.

I am south asian and this is the advice we got- you only need enough rent that it covers your interest payment, that is enough money to justify keeping the property. Think of paying the principle as an investments/savings vehicle. I would add maintenance fees to this but the people I know who follow this advice are refugees the I got here with 20 bucks in my pocket/one suitcase crowd and they are all millionaires now.

I know ppl love to leverage debt for real estate but I must say that the fully paid off commercial property I have that brings in a very tidy sum brings me incredible peace of mind for my old age.

But you can also invest that "sold commercial property value" and bring in a "very tidy sum" and not be tied to managing a property. For SFH it typically doesn't earn you that much. Not worth the huge hassle IMO