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To Sell or To Rent, That is The Question
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Unexpected situations come up frequently after purchase of a home, and a job offer that takes you to a new city is near the top of the list. A reader who was recently offered a job on the west coast now faces an interesting dilemma: Should he sell his home at a loss or should he try and rent it out in the hopes of recouping some of his down payment? The reader’s full story below. Offer your thoughts in the comments section.
I am on the verge of landing a job on the west coast job, an opportunity that arose in the last month and wasn’t something I had planned for. I’m certain I will take the job if the offer is extended. What I’m very uncertain about is what this means for the condo I bought in DC two years ago. Renting out my place is never something I thought I’d need to do, but selling a property that hasn’t yet appreciated would wipe out most of my 10 percent down payment.
Here are the details of my unit:
I’m not going to be able to be a hands on landlord, so I’d assume I’ll have to pay a property management company $200/mo raising total expenses to $2,700/mo.
If I decide to rent, I will be competing with 425 Mass opening a block away, that has a lot more amenities than my building, so I’ll need to come in under their pricing (maybe $2,200/month). That said, my condo is in an in-demand location, so I shouldn’t have problems finding renters once I have figured out the right rental rate. Also, I think the relocation package I receive from the new employer should cover a month or two of rent while I find a tenant. However, with just 5 years left on the ARM and the long distance, I don’t want to be a landlord for more than a few years.
So, given my relatively short time horizon what are my prospects? I can’t imagine I’ll generate much, if any, rental income during a 3-4 year timeframe. But could renting the property out help me recover more of the principal I’ve invested than selling now would? I would think if I wait it out just a few years, the property should appreciate by $20K or more which could help make the real estate transaction costs more bearable. Selling now seems pretty grim. But I don’t want to take on the aggravation of being a landlord if it’s not likely to improve my financial outlook. I’m clearly not liking a negative $500/mo cashflow, but if the cashflow was positive this wouldn’t be a decision I was so conflicted over. My goal in all of this is to recover as much of my initial $37,500 as I possibly can at sale.
See other articles related to: dclofts, rent vs buy, renting in dc
This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/to_sell_or_to_rent_that_is_the_question/2041.
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