- April 29, 2024
- Posted by: legaleseblogger
- Category: Related News
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# Financial Decision: Renting out Condo vs. Investing
My wife (33F) and I (35M) were married last year and purchased our current home. We still own her condo, which we have been renting out for the past year. Here are the numbers for the condo:
– Balance: $99k
– Value: $237k
– Interest: 3.8%
Our monthly expenses for the condo include Principal/Interest/HOA/Rent Fee of $858, while we receive $1,550 in rent.
In order to make a decision that will lead to long-term financial growth, we are considering three options:
A). Continue renting out the condo, and apply the profit from rent back to the payment to pay off the mortgage faster. This option will help us build equity in the property quickly and potentially allow us to sell it for a higher price in the future.
B). Continue renting out the condo, and invest the profit from rent into a Roth IRA. This option will help us build savings for retirement and take advantage of the potential growth in the stock market.
C). Sell the condo, take the equity, and invest it into a S&P500 fund. This option will provide us with immediate cash from selling the property and allow us to potentially benefit from the long-term growth of the stock market.
Using AI Legalese Decoder can help us analyze the legal aspects of each option, such as tax implications, rental agreements, and investment risks. This tool can provide us with valuable insights to make an informed decision that aligns with our financial goals.
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****** just grabbed a
Either sell ASAP or commit to being a landlord. I’m assuming that she lived in that Condo for at least 2 years before renting it out. Generally, if you sell a home that you lived in…I think it’s 2 out of the last 5 years… you get a break on capital gains taxes. If you wait until you can’t say you meet the residency requirements for the tax break, you lose it.
The problem with rentals is tenants. They break things. They wear things out. My son is renting a condo and the landlord just had to replace the water heater.
If you do choose to keep it, I’d chose A…but you need to include a rental maintenance fund as part of your equation.
I have to say that spread between mortgage and rent is enticing… but I’ve seen / heard of enough bad tenant stories that I don’t want anything to do with them.
I would keep it and every so often especially rates improve you refinance it and take out equity. So when rates get better I would say refinance it for 50k and pocket it that and invest it then you have the renters payback the mortgage. And you repeat that process and invest it or use it to buy other properties
And check with a CPA, especially if you have been deducting depreciation.
100% sell. We were in same predicament with a 2.75% interest VA loan with $788/mo mortgage & rented it out for $1,500. After all fees including PM, we were cash flowing $560/mo.
However, tenants trash the house, spray painted walls broke outside deck and ruined the yard. Tried suing us etc etc.
We sold, made profit and maxed out our ROTH’s & savings accounts. Now we sleep like babies. No regrets. To much hassle.
if you do sell i highly recommend more diversification than just an s&p fund. It all depends on your risk tolerance ultimately
If you pick to keep renting I recommend using the equity to buy another rental. If not sell the property.
237k minus 6% in selling fees. 222 – 100k will net you around 120k. You can get 5.5% in hysa so return is $550 per month without risk and hassle. You are making about $700 month now. With tax benefits of renting I would hold on to it if my out look of the condo of appreciation in value.