patrick.net

Sell. You'd be insane to rent out at these numbers.

It's in the Seattle area.

I'm mostly interested in whether you think I can actually make a profit on renting it long term. I have zero experience as a landlord. An extra $500+ a month is tempting, but not if it's going to cost me $1000+ to earn that.

1) If you bet on appreciation, rent it.

2) But the income is usually less than you think, vacancy, maintenance/repair, and property management (1-2 month of rent.) I image you will only break even if you use a property manager.

My thought is that even though it is not worth just for the rent cash flow, you might profit big time through the appreciation.

It is your own bet.

Read about landlording from a few books, fix up anything needs fixing, and then rent it to a couple/family for one year because even if you do not make any cash money out of it you will (a) get experience of being a landlord and (b) your house will appreciate in one year so then you can decide if you want to continue to be a landlord or you want to sell it. Landlording is not all that bad. Treat it as a business where you have problems you need to take care of.

You have a couple advantages here over an investor for whom the numbers make it a tough decision.

1. You probably have a low-interest owner occupied rate.
2. Having lived there, you have good idea what the condition of the house is in.

If the house is in good shape and there's not any deferred maintenance to be had, I'd rent it out.

If it's well kept, more than likely you won't have many maintenance issues. Perhaps the occasional clogged drain or handyman fix, but nothing that will burn a hole in your wallet. In fact, if you live nearby, I'd probably skip the property management and save that money for maintenance.

Drop the rent $50/100 to increase prospective tenants and find a great tenant. Make sure you do the appropriate checks and CALL the previous landlord.

If you are able to find a good tenant, you'll probably get a call once a year about a minor plumbing problem or handyman fix.

$500 / mo + ~10k in principal isn't too bad. Depreciate the property on your taxes yearly and you'll save there too.

In 29 years when it's fully paid off, that 30k/year will definitely help your retirement plans.

donjumpsuit says

I don't care what you think, if I somehow found it buried in a 6 page
contract that you won't fix my garbage disposal, that would be grounds for
ceasing to pay rent.

You cannot givith and then taketh away.

Garbage disposals are not regular drains. If you are concerned about the
disposal breaking, remove it and include a regular drain.

I get the dishwasher. I wouldn't stop paying rent for a broken dishwasher,
but a non usable kitchen sink would have you dead in your tracks.

I suppose you can read the clause to the tenant instead of just burying it in the contract. Does not like it? Find the next one in line.

However, I would not do this to a garbage disposal in case a stupid tenant would do a stupid thing when it is clogged up. Simply remove the garbage disposal if you do not like the chance of breaking.

Kevin says

It's in the Seattle area.

I'm mostly interested in whether you think I can actually make a profit on renting it long term. I have zero experience as a landlord. An extra $500+ a month is tempting, but not if it's going to cost me $1000+ to earn that.

Thought about refinancing into a lower rate before renting it out? I do not know whether that will interference with your new loan though (assuming you take out mortgage for your new house.)

I have to say I'm with Don on this one.

If you expect to charge a higher than average rent its reasonable for your tenants to expect a better than average property and better than a slumlord management. If you don't want to keep fixing the disposal fine, put in a unit with a lifetime in-home warranty like this one:

Waste King 8000 Legend ~$115 or less
http://www.amazon.com/Waste-King-L-8000-1-0-Horsepower-Continuous/dp/B000DZGN7Q#productDetails
http://www.waste-king.com/wastekingwarranty.html

RentingForHalfTheCost says

Looks like there is some wind in the sails at this point, but it also could just be hot air that will run out soon.

That's it, Hell just froze over.

BUY NOW!!!

Here's what my WAG at your situation (main deductible monthly expenses) looks like
Prop. Taxes: ~$500
Interest: ~$1200
Depreciation: ~$900 (based on $300k straight line depreciation on the structure over 27.5 years -- not sure how realistic this is -- perhaps one of the pros can comment).
The take away is that you will be taxed on only ~$200 ($2800-$2600) of rental income, perhaps even less given other misc. expenses. We know your salary puts you well past the passive loss phaseouts, so just keeping net rental income from the rental near zero is all you want anyway. Not a bad deal; it looks like ~$8500 of principle paydown in the first year ($700*12) + $3600 untaxed rental income ($300 per month *12) + $2400 taxed ($200*12). Misc. additional expenses will give you more untaxed cash but results in less net (taxed) rental income. Be aware that the tax man recaptures your depreciation expense when (and IF) you sell. IANAL or tax account. I don't even own rental property. YMMV.

Breaking ground on a new place already? I thought you just bought your first place?

I'd sell. Seattle is doing well right now for sellers.

Id sell as well. Just not worth the headache and liability to risk closing the trade. Don't sweat leaving something on the table. Just put a higher asking price