[Amanda]

About a year ago, we moved to a different town for my husband’s job and are now living in a rental, but kept our house in the other city.

We have about 1.5 years to figure out if we should sell it in order to not pay capital gains. Here are our facts:

We owe $240k on the house and it’s worth about $525k. We have a 2.875% mortgage rate.

We are currently renting it at $2800/mo, our mortgage/insurance/taxes is about $1600 and we set aside $200 for repairs, so we are making about $1000/month that we are putting in our investments.

We absolutely love renting. It’s so nice to not have to worry about any home projects and each thing that breaks just takes a call to fix.

We are paying $2500/mo in rent ourselves.
We could not afford to buy a house in the area we live in without selling the house (median prices are about $700k!!), but we are ok with renting forever if we can.

So my main question is, would it be worth it to sell the house and put the roughly $285k directly into the stock market?

Even if it ended up being closer to $250k after the dust settles, I think we would be making about $1667/month with an average compound interest rate of 8%.

Am I doing the math right? What other components am I missing as we think about this?

[Cris]

I’m team, sell, because I sold my house and put all the profits in the market too.

Best decision ever to be 100% debt free and have the freedom to live wherever I want.

[Melissa]

First things first, do you want to be a landlord?
If not. The money doesn’t matter.

[Brian]

You are missing the principal repayment portion. You currently cash flow $1000 per month, but you need to also add in the amount of principal that you are paying as this is also increasing your equity and net worth.

Compare that to what you would earn in the stock market.

Also consider capital appreciation of the house.

[Dave]

With a sub-3% mortgage on a cash-flowing property, I’d say continue to rent it out (and hire a property manager if landlording gets to be too cumbersome for your liking.

[Yvonne]

I will suggest keep the house. It will continue to appreciate.

[Andrew]

It’s generally not good to learn how to be a landlord, while long distance.

It’s likely nice short term when you’re not doing tenant turn over or remodels, but those days will come.

[Author]

Posts