Keep renting or sell now? I'd like your opinion

[gamecock43]

Livingalmostlarge, you make a very valid point I never thought about. Very good point against owning a rental.

[AmbitiousSaver]

Because one major catastrophe by the renters and you'll be out the entire profit.

My BIL's rental the toilet fell through from the second floor to first floor on top of the first floor toilet. Besides the flooding, imagine if it had fallen on one of the renters????!! YIKES!

They were gone for Christmas break thankfully so none of the 3 boys were hurt, but they also weren't around to shut off the water. Well the neighbor called the HOA and the HOA called the owner. The OWNER had to drive 3 hours from his house to fix the problem.

Then he did the repairs. THEN he paid for a hotel for my BIL and the other renters. THEN he had to deal with all the contractors. Then he had to deal with insurance and claims for all my BIL and he roomie's possessions.

The end of their lease came and they were kicked out because he was selling the place. Said it was TOO MUCH MONEY to have to deal with repairs. It ate into the profits.

So what happens if something breaks? Or a fire breaks out? Or any other liability? Even some friend visiting and slipping down the stairs? They can sue you. But besides that say the furnance breaks or the hot water heater.

You pay a premium for repairs done NOW, not tomorrow, not when you have time, not when you can get estimates from 3 different people. NOW, NOW, NOW. And when the repairs are going on don't expect rent.

All very valid points. I will admit I think I got too sucked into David Bach's "Automatic Millionaire Homeowner" scheme that I guess I never considered those points. I thought that was why there was insurance. Which reminds me... I have to call the PM to find out if she ever found a dryer vent cleaning company cause the tenants dryer seems to be taking longer to dry clothes. Sometimes I wonder what I'm paying for... she told me it should only cost $65 for the repair to the A/C they just did, but my deposit this month was $150 less than the usual. So the invoice was 2x what I expected.

Anyhow, you've convinced me. But I do wonder, how do other people be landlords successfully? Again, I'm trying REAL hard to get the whole David Bach mindset of becoming a landlord out of my head... but I value your insight as its making me realize a few things I don't remember his book ever touching on.

[disneysteve]

AS - I read that book too and I found it disturbing. I thought it painted a way, way too rosy picture of becoming a landlord. He made it sound like it is the easiest thing in the world and anyone not doing it is an idiot. The old saying of if it sounds to good to be true... came to mind.

Certainly, people can and do make money owning rental property. But the bottom line is that YOU are NOT making money. You are SPENDING $300 each and every month and expect to be doing so for the next 3 years (if all goes as you expect).

It has been a while since I read the book, but I'm pretty sure he advised only buying a property that had a positive cash flow. Yours has a negative cash flow. That isn't an investment. It is an expense. Cut it loose and move on. If you still want to do the rental thing, take the money and find a place that will have a positive cashflow.

[LivingAlmostLarge]

I read that book too and the MAJOR difference is every point has positive cash flow which bulks up the savings fund for repairs on the unit.

Sure appreciation is great, but do you have the cash cushion to handle if people's checks bounce? Or they trash the unit and you need to do repairs?

[disneysteve]

Sure appreciation is great, but do you have the cash cushion to handle if people's checks bounce? Or they trash the unit and you need to do repairs?

Also, what if your renters leave and it takes you a while to find a new tenant? You'll need to cover all expenses during that period.

[loveviolet]

Depends on your tax saving and renter stability

If you have a high tax bracket (> 30%), it might makes more sense to keep it. Also if you have a stable tenant which doesn't cause you any trouble, you might want to wait for a while until market turns better.

Also when you do your calculations, be sure to include the property tax as well. (remember to do your tax appeal too to reduce your property tax!)