should i rent or sell

I have a townhome that is a rental. We bought a house in 2009 and could not sell the townhome so I am renting it. Your typical accidental landlord.
Here are the numbers:

Monthly rent: $1300
Real Estate Tax: $5200
Monthly Assess: $165
Monthly Mortgage: $1200

There is $70,000 owned on the mortgage. The mortgage
will be paid off in 5 yr 5 months. The mortgage interest is 5.5%.

Recent foreclosures in the townhome development have sold for
$110,0000. I bought the property in 2004 for $195,000. If sold at that price then I would walk away with about 20K
after closing. One townhome listed at $144,000 is under contract.

Should I stay or bail? It is currently empty since the last tenant just moved out.
The condition is very good now. A year ago I had to repaint the whole house, new carpet, and some other repairs. The tenant that moved out at that time were hoaders with 2 kids that wrecked the place. At least they moved out.

thanks for any advice!

I believe that you should do business on purpose. I would sell it and buy a rental property specifically for making cash flow.

over 600 views on this thread and 1 comment. what a great forum. NOT!

Jocking on the Forum is not an answer…

Whether to sell or rent is a highly personal choice. The answer is “It depends”

Keith

you’re in a NEGATIVE CASHFLOW situation. This is more important that the gain/loss on the sale.

How much will you “gain” by not having a cash sucking townhome until you decide to sell (or the mortgage pays off)?

I’m guessing that you could have taken the loss in 2009, kept the cash you’ve put into it, and be ahead today of where you are. But you already know that; it’s really irrelevant except for teaching others the lesson.

Look, you can’t change the past. You’re cash positive if you sell today. Sell it, put the $20k in your 401k, take a capital loss on the rest, take the $500/month you save and take your wife on a cruise.

If you want to be a landlord, see if you can refinance to get the cashflow right.

Sell. Taxes are too high to make money.

Hey,

If I’m interpreting your numbers correctly, you have approx. $70K
in equity(based upon the property under contract).

…and you have only 5 1/2 years left to payoff your mortgage.

Step #1-get some bandit signs and Craigslist advertising happening to fill that vacancy

Step#2-refinance to a lower rate.

Step#3-get a HELOC and pull out that $70K and use it to buy a strong cash flowing asset.
(10% your skin, 10% seller, 80% lender)

Good luck!! :big grin

P.S. Your taxes are horrendous!! A realtor will be happy to provide a list of comps and the assessed taxes. Use this to lower your taxes, if applicable.

“Your taxes are horrendous!! A realtor will be happy to provide a list of comps and the assessed taxes. Use this to lower your taxes, if applicable.”

I’ll bet this accidental landlord is in NJ. I’ve got a few townhouses in southern NJ and my cheapest yearly RE tax is $4800. The taxes here make it hard to cashflow a property but I do it the hard way: buying distressed properties from distressed owners, doing almost all of the repairs myself to save money and creating extremely nice properties and then renting at market value rates.

The average property tax in New Jersey is $8800 a year…

Socialism isn’t cheap

I’m no expert, but since your monthly rent is only $100 higher than your monthly mortgage… meaning that it’s definitely negative after maintenance and all other costs… I would SELL…

Why did you buy it in the first place? What was your original intention?

I agree with Kaith. If you’re considering renting or selling a property, you should definitely ask the consultation of real estate agent.

I also believe that you should do business on purpose. I have been stuck with two rental homes of mine that were “accidental rentals.” One was my former home, the other a house that was on my farm when I bought it. Both were cash flow neutral and kind of a pain. For us, keeping them as rentals was the right thing to do, but more for tax reasons than anything else. I finally sold my old home this year at a huge loss, but used it to offset a huge gain on one I bought on purpose. I have the other small property here at the farm, but I won’t ever sell it. It’s too close to my house. I have daydreamed about renovating it and turning it into a vrbo vacation rental with fishing and hunting rights but so far it just sits there.

So…my vote is for selling. If you aren’t making good money on it then it’s just a burden. Prices are high here now, capitalize on that and sell.