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PaperclipPerfector  16d ago (text post)   2838 thread views

Small-Scale Question Sunday for May 12, 2024

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I have effectively made the decision to move out of my home in the middle-class Dallas, TX, suburbs into an apartment in the fun part of town. I am debating whether I should rent the home out or sell it and would like advice and/or experiences from my fellow Mottizens. I am leaning 75/25 in favor of selling given the thoughts below.

Background:

  • 26 year-old male in committed relationship that I expect to result in marriage. We would not move into this house together if we got married.
  • Home is appraised at $380k and has a 30-year mortgage with 3% rate. Monthly payment all-in is $2200 and expected to go up due to property values increasing.
  • Home is in a socially "meh" area with meh schools and stroads galore

Pro-sell thoughts:

  • I do not have the time to manage tenants unless they are truly very quiet nor am I willing to risk getting shitty tenants and having to deal with them
  • I can simply pocket the cash and have peace of mind about not having to worry about the house and its illiquidity, tenants, etc.
  • I am moderately risk-adverse when it comes to money and investments and it can cause me stress. If I were to move to an apartment and have a vacant home, my combined mortgage and rent would be about 80% of my post-tax income. (I have plenty in a brokerage account that could cover me, but I don't want to sell that.)

Pro-rent thoughts:

  • More equity: I do not care about making a large monthly profit off of the house (maybe $100-200/mo to pay for emergencies), but rather building equity so I can get more money when I eventually sell
  • Property management companies can, but not always, do a good job of not letting anything make it to the homeowner (from what I've read)
  • If I get lucky and find excellent tenants, I can treat them very well to increase the likelihood of them staying (but this is still risking it)
  • My area's real estate market is relatively in-demand with little sign of slowing down (not including reasons that affect all U.S. cities), which may allow me to sell a bit quicker than other markets, especially if I sold for below market value (which I'm fine doing if absolutely needed)
  • 3% interest rate is very good and I suspect we won't see that for a long time

It would be foolish to give up that 3% rate. That is free money dude! What are the rental comps looking like. You're also locked in except for tax increases/insurance, the rent rise a lot over the next 30 years but the mortgage will be the same in 2045 as it is today! Tenants aren't that bad if you vet properly. Just self manage and tell the tenants you're just the property manager. Saves a lot of headaches.

This is Dallas, self-management is a bad idea unless you’re plugged into a network that pre-vets people and have a lot of free time.

Can you explain what makes Dallas such a different and difficult rental market from a self management perspective?

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