Should I rent my house out or sell it ? (Austin: 2015, foreclosure)

[Jimmyp25]

Currently looking to buy a house with a couple acres to locate my home business to and live. Looking in marble Falls area ... Currently own a house in Cedar Park. Ive been pre-approved to buy a 2nd house without having to sell the house... thinking about renting current house out? Just have a feeling renters will trash it, plus I wont be able to cash out on the tax advantages.

Opinions , thoughts? Similar situations?

Thanks,
JP

[Jimmyp25]

Originally Posted by JoeSmow

Hard to say. There's not as much benefit with the new tax law. Will you be able to generate cash flow?

I currently have two properties that we are renting that are out of state. We are in the process of selling one that's we've owned since 2006. We never missed a beat on rent in the entire time we owned it (fairly low maintenance costs also). With that said, I've never managed my own property. A good property manager can properly screen clients for you and hopefully ease your feelings that your house is going to be trashed.

We will be using the proceeds for a down payment on a house in the area. We will be renting it as it's a 1031 exchange and we don't want to incur the tax hit.

Why won't you be able to cash out on tax advantages? Did you not live there for 2 of the last 5 years?

Sure,

we bought it as a foreclosure in 2015 . We have been living here. If we begin to rent it out though. Doesn't it turn it into an investment property? I have pumped some money into it...New Roof, Landscaping, Irrigation, New Kitchen, new flooring... etc.... it was unlivable when we bought it lol....

What do you pay for property management company? I read it something in the 200 a month range? but that varies for austin?


Our neighborhood is already a rental neighborhood as I only border 1 house that has a owner . We just feel like we cant have neighbors because everyones in and out ...doesnt feel like a neighborhood.

So your properties are not in Austin?

[Jimmyp25]

Originally Posted by JoeSmow

Neither property is in Austin so I wouldn't be of any help on what they charge here (I'm in the process of finding that out myself and seeing about finding a good property manager).

One properties are in Salt Lake City and the SF Bay Area. We pay 10% of rent on Salt Lake City and 6% of rent in the Bay Area.

And yes, if you rent it out, it turns into investment property.

The Salt Lake City property served its purpose for us (some cash flow and a nice tax writeoff). With the new tax law, last year was the first one in the last 25 years we were not able to itemize (so it was a good time for us to sell it).

In order for us not to have to recapture the depreciation and the gains, we will have to rent it out for 2 years and then we can move into the new house without any tax consequence.

Its hard to tell with those housing markets though! The SF housing market only has so much to offer . We Already have 100k equity in this house and its been 4 years! SLC is a good market though. Just tryin to judge how this Austin market it heading. Its been on fire and owning property in the area does not disappoint. Its currently back on fire though.

[AlterEgo42]

Originally Posted by Jimmyp25

Sure,

we bought it as a foreclosure in 2015 . We have been living here. If we begin to rent it out though. Doesn't it turn it into an investment property? I have pumped some money into it...New Roof, Landscaping, Irrigation, New Kitchen, new flooring... etc.... it was unlivable when we bought it lol....

What do you pay for property management company? I read it something in the 200 a month range? but that varies for austin?


Our neighborhood is already a rental neighborhood as I only border 1 house that has a owner . We just feel like we cant have neighbors because everyones in and out ...doesnt feel like a neighborhood.

So your properties are not in Austin?

Sell it. Just take your equity and run.

[Austin97]

also your mortgage and insurance might not be ok if you transition to an investment property. Your mortgage is supposed to be for a primary residence.

[Austin97]

Originally Posted by JoeSmow

Jimmy, have you lived in this home for at least 12 months? If so....fahgetaboutit.

You're not under any risk of mortgage fraud by converting your place to a rental. Most mortgage contracts have a "intent to occupy" clause which simply states that you are the original owner and live in it for a length of time (which is typically 12 months). If it's any type of traditional mortgage, this shouldn't be any problem at all. I'm guessing you qualify on this.

And yes, you should contact your insurance company.

Its probably fine, it might not be. It only takes 10 minutes to read your contract to make sure it is ok.

[Jimmyp25]

Originally Posted by JoeSmow

Jimmy, have you lived in this home for at least 12 months? If so....fahgetaboutit.

You're not under any risk of mortgage fraud by converting your place to a rental. Most mortgage contracts have a "intent to occupy" clause which simply states that you are the original owner and live in it for a length of time (which is typically 12 months). If it's any type of traditional mortgage, this shouldn't be any problem at all. I'm guessing you qualify on this.

And yes, you should contact your insurance company.

Ive lived here for about 4 years .. We did not get a FHA loan. We went conventional . So im pretty sure theres no restrictions on renting it out but I can double check.

[AlterEgo42]

Originally Posted by Jimmyp25

Ive lived here for about 4 years .. We did not get a FHA loan. We went conventional . So im pretty sure theres no restrictions on renting it out but I can double check.

If you've paid it off entirely, or intend to move back there at some point, then I'd rent it out.

If not, I'd sell. Being a landlord is not very fun when you own your own business as well.

[thenewtexan]

Sell it. Ask yourself do you really want to be a landlord? It's a major headache. You don't need that.

[Westerner92]

Save yourself the headache; make the world a better place. Sell it to a young family that just needs a chance to build equity.