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PaperclipPerfector  1yr ago (text post)   4121 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

I'm going to buck the trend and say you should sell. In my opinion, administrative overhead is greatly under-estimated. Simply not having to think about X is worth a lot.

To me, it feels like you aren't going to care about the house. At best, it's a source of small income. Cut it free, take the capital gains and the mortgage payment and do something else more relevant to you with the money.

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