Rent Out Or Sale?
Recently purchased a foreclosed home. Remodeled home and all along thought we would just try to sale to get our $15,000 costs out of it plus profit of $25,000.
However, the more I read, the more interested I am in renting it.
This is our first house:
I would like to know if we should be thinking of the buy low/sell high in order to "retire" from our jobs or more about buy and hold property to achieve our goals quicker?
The house was purchased at $110,000 and we have it on the market for $150,000.
Question 2: If we do hold it and rent it out, how can we get our rehab costs out of the property quickly so we can go forward with the next purchase?
you could refinance it to cash out the equity and get back the money you put into it. if you can still rent it for positive cash flow after that, then why sell? if the property pays for itself as a rental, then by all means, i'd let it pay for itself. it will only go up in value over time, and the rental income is indexed for inflation while the mortgage payment remains the same.
It depends mostly on your goals. The landlord business is not for everyone. Tenants will break stuff, call you about stupid things, not pay on time, etc.
It is my experience that single family homes do not cash flow in my area. However, if you are confident that it will rent for above your expenses, then it may be something to consider.
My thoughts are to sell the property because my personal goals want to get into apartment buildings for rentals rather than SFH's but that's me...again you need to look at your own goals and dreams! GOOD LUCK
And remember, if you rent it, when you sell it you will only pay capital gains tax. If you just rehab and flip it you pay ordinary income tax AND self employment tax.