My wife and I need to relocate in early summer 2024 for childcare reasons. If you stalk my posts, you'll see this isn't the first move for childcare but that's another story that ends with my in-laws didn't help with the kids as they said they would. Wife is more bitter than me so no need to beat that horse.

Anyway, our 2021 build house will probably have a hard time selling due to the new neighborhoods in the area. Builders are offering incentives that we likely can't or don't want to match. The house next door sat vacant for a year and is now a rent house. The house across the street sat vacant 6 months and is now a rent house. The house on our block that did sell sold to OpenDoor after a failed run on the market. So obviously I'm having to consider renting the house instead of selling….

Help me understand what I need to be concerned about when considering renting the house - things like my current mortgage, current homeowners insurance, homestead exemption, negotiating lease terms, how much to charge for deposits, etc. I'm trying to decide if it's even worth entertaining renting our house.

For context, I'm locked in at 2.75% on a 30 year conventional loan with 28 years remaining. Zip code 76044. Rental income would net $400 - $600/month. I'll be able to buy another house without having to sell current house. I could sell to OpenDoor and still come out positive. Renting the house seems like more liability than it's worth. I grew up around rental properties and I remember living the horror stories of bad tenants - but they were apartments, duplexes, trailer houses, etc and didn't attract the quality of tenant that my house would attract.

If you were me, would you sell the house traditionally for under market value, sell the house with some similar builder incentives for about market value, sell the house on OpenDoor, or rent the house….and help me understand why.

TIA

There is no right answer. You have to decide what you want to do. I would talk to a management company and see what they do for their money and what it cost to see if that makes sense. Then if you do use them learn everything they do so you can later manage it yourself. Also see what Nextdoor or like company will offer to compare options.

Build wealth and rent it. First rental is the hardest to get. The rate alone makes it a no brainer.

If you are truly net $400+ AND you don't mind the work, then rent it. In 5+ years you'll be happy that you did.

Ill be happy to discuss more details of renting in general if you want to post contact info.

Another option is to contact your mortgage company and see if your loan is assumable. I've never done this but I've seen it offered. This way you'd be able to get your money out of the house and the buyer gets a great rate.

I believe the problem is that the buyer would have to pay you in cash (or I imagine a second mortgage to cover what they can't in cash) for your equity in the home.

Red Pear Realty recently offered one in the real estate board. Might be a good person to reach out to discuss it.

I'm in a similar situation as you are and I'm going to put up my house for rent in Feb/March. Got Jaime helping me out. He's amazing.

He was a good commander too in the Corps. He was not happy the on time we batt ****ed his room though

CS78 said:

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If you are truly net $400+ AND you don't mind the work, then rent it. In 5+ years you'll be happy that you did.

Ill be happy to discuss more details of renting in general if you want to post contact info.

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Once you rent out how does that affect your insurance premiums? I'd assume if the renter is required to have renter's insurance that would only cover their stuff and not the house in general.

You will need a rental home policy. It cost more but not sure how much in this crazy insurance market. You also should get an umbrella policy as well.

He will just get a land lord policy. Also, with as new of a home as it is, buy a home warranty and let it cover the maintenance and unexpected stuff as a hedge if worried about the out of pocket expenses. Your net would cover one in 2 months.

would need to know more to see if this idea has merit.

As others have mentioned, does rent "covering $400-600 per month" account for increased insurance costs, losing homestead exemption, 50-100% of 1 months rent to pay on commissions, maintenance allocation, vacancy allocation, etc.?

These are things that can eat up that cushion (if there is one) pretty quickly, and turn this into a dilluctive proposition.

nice to have, but appreciation should never be assumed in a proforma. the opposite can occur as well.

If you can afford the move without selling I would definitely rent it.

That house at 3 yo should be pretty maintenance free. For 5 to 7 years. If you are that cash positive,you are doing pretty great with a mortgage.

Remember your taxes will go up without the homestead. Make the tenants have insurance.

Always hear the horror stories. The biggest key is getting good tenants. Even if you hire someone to help with that you should be good cashwise. Get good tenants, be responsive and communicate well and thing should be fine.

Either use it as a spring board to more rentals or sell it when the market improves. Not a terrible place to be!

Corps_Ag12 said:

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Last rental property I owned the insurance went down. I assumed it was due to none of my stuff in the house.

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This, we recently bought a house and decided to rent ours (also with the help of Jamie). Our insurance on it went down, but not as much as I expected.

It was also fairly difficult to find insurance. Liere, at the time, didn't have anyone offering policies, for example.

And just as a counter to those saying the low rate makes it a no brainer.....the current high rate environment definitely complicates things. Take whatever equity you have in it out and investing in a 5%+ guarantee is also hard to beat..... Or the option of using that capital to pay down a new higher interest loan...

As said above, we ended up renting vs. selling but it was a tough decision. The main reason we went that route is because the house is in a high desired young professional area in central Houston. If it was out in the burbs, which kind of sounds like your is, we would have just sold. Also, we have a 15 year mortgage w/ just a few years left on it.