We have about 150K in equity on our condo (based on recent comp sales) in South Orange County, CA, but need to move to a larger home. Should I rent out the condo or sell it before moving to the new home?
Definitely sell.Youre leaving yourself open for many headaches if you rent the place out.
Renting is a risk because you, as the landlord, have to uphold certain obligations and I’m sure your condo have a convenant of rules you have to follow and make sure the person who is renting follows. I would sell it and if it doesn’t make sell by 1 year, then try renting. Just weigh your options carefully.
renting out is a major hassle, and some of your equity may be eaten up with repairs and legal fees for evictions, etc.
Sell and reinvest in a new home.
i would sell…
It depends on your long term plans. Obviously with that much equity you could sell and make out or you could rent, possibily pay your expenses with that income and have an investment property. If you can afford to keep the property and buy a new home I would do that.
Renting can be a hassle but it depends on how you handle it. Personally I have a rental property in which I have a property manager handle. I use a local branch of a national real estate company and they handle everything for a set fee. They handle the advertising, legal paperwork, credit checks and check in on the property. Good companies know exactly what to do to keep your property in good condition. Those horror stories you hear are a very small percentage of rental properties. If that happened all the time, why would anyone do it? Yet, something could happen, so you make sure that your insurance is covered for renters and you’ll be fine. Interview a couple of property managers to see what they charge and what services they would offer.
After interviewing, crunch your numbers. If you can pay the manager and the mortgage with the rental income than you are doing great! If you come close but still can handle the out of pocket expense than you are doing well.
Even in this market, real estate is still one of the safest investments and could be one of the cheapest if done right. How many other investments can you have where you not only hold on to your principal (the home) but also have the principal making the money (rent) with possibly very little if any out of pocket expense?
If you had put that $150K into your primary residence it also would be making money but could be more difficult to get cash out if you wanted. You would either have to sell which you may not be ready to do, or you could take out an equity loan or line of credit and put another lien on your property. Of course, you won’t have someone renting and paying for that primary residence. You could always take equity out of your investment property and can avoid having any investment ties on your primary residence, which I personally like.
Again, this depends on what you would like to do long term, but I would keep the home, rent it, and in 3-5 years reevaluate the situation. If you have $150K in equity now, in 3 years you could have well above $200K, probably more. So basically, you just made $50K (or more) with someone else’s money.
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