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Advantages/disadvantages of Renting or Selling

2,999 Views | 20 Replies | Last: 3 mo ago by Matsui
sklipes
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6:12a, 6/17/24
Current situation - Own 2 properties in San Antonio: 1 house near Med Center is paid off and finishing up a renovation, 1 house in East San Antonio (less than a mile from Riverwalk) has about $120k in equity, 2 older kids (1 heading off to college in the fall & the other a year younger) and have a baby on the way early next year

The renovated home will be the primary residence, so the question is what to do with the downtown home. Do we put it up to rent or sell it?

We are not cash strapped, so cash flow or immediate need of funds isn't an issue. We eventually want a home outside of the city and another condo/home near the city center as we near retirement in about 15 years.
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CS78
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8:00a, 6/17/24
If you don't mind the required effort, I don't know anyone that held a rental for 15 years and said they wish they hadn't.
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JMac03
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8:02a, 6/17/24
AG
I personally vote to rent it out. We are kicking ourselves for selling our first home to buy our second (many years ago). We started getting into rentals a few years ago and will continue to buy one every 1-2 years. While it can be a pain if there are issues, overall it is a positive experience for us.
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Furlock Bones
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11:08a, 6/17/24
AG
I wish I had never sold my first house. I did pretty well selling it. but, i would have been far better off keeping it and renting it out. hindsight is 20/20.
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Red Pear Realty
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12:38p, 6/17/24
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AG
Hold out and rent them if you can.

Also, Breanne can help you with leasing them if you'd like. Our contact information is on our website or you can PM me here.
Sponsor Message: We Split Commissions. Full Service Agents in Austin, Bryan-College Station, Dallas-Fort Worth, Houston and San Antonio. Red Pear Realty
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Absolute
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In reply to CS78 • 2:45p, 6/17/24
AG
CS78 said:
If you don't mind the required effort, I don't know anyone that held a rental for 15 years and said they wish they hadn't.
This.

I have definitely felt the opposite as others have said above.

Since you say money is really not a huge issue. Put it with a good Realtor or Manager and let it grow in value and perhaps even lead to more properties.
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htxag09
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11:01a, 6/18/24
AG
As someone who just decided to rent vs. sell their old house, I'll offer some counterpoints to the above.....

If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....

Also, I've heard from multiple people, and can definitely see it being true, that unless you have multiple properties to balance out costs, they wouldn't hold personally hold them for long term.

The house we are renting got a new AC in 2021, a new water heater in 2022, a new roof in 2022, new appliances around that time, etc.. We're definitely cash flow positive now, but having to get a new AC unit or roof would definitely wipe out a few years of that positive cash flow.

All that said, we held and rented for a reason. But I don't think it's as clear cut as a lot of people make it out to be.
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Absolute
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In reply to htxag09 • 4:57p, 6/18/24
AG
Gotta start somewhere. But I would agree there are downsides.
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AgsMyDude
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In reply to htxag09 • 11:19p, 6/21/24
AG
htxag09 said:


If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....


How much has the home appreciated in that same time frame?
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htxag09
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In reply to AgsMyDude • 6:58a, 6/22/24
AG
AgsMyDude said:
htxag09 said:


If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....


How much has the home appreciated in that same time frame?

Hard to say. Probably around flat, though.
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Aggie Planner
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3:39p, 6/22/24
AG
My wife and I are having this same conversation now. Planning on building in the next few years, and our current home is a perfect rental. It feels like a shame to lose a 2.5% interest rate as well on a house built in 2020.
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Dan Scott
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7:12p, 6/22/24
AG
I tried renting out my older home for the past 7 years. In the end I barely came out ahead given the effort and stress.
  • First tenant stayed 2 years. It was perfect. Nice couple never called me and left house in great shape where I barely had to spend to prepare for next person
  • 3 months no tenant
  • 2nd Tenant, guy stayed 1 year. I was away in Dallas for work assignment for a year and it seemed like everything needed repairs at this time. Home was in Katy.
  • He leaves right before Covid
  • Home sits empty 5 months
  • 3rd and final tenant at discounted rate after sitting empty so long - Stayed 3 years. Young family left the home a mess.

If not for the massive appreciation in value the last 3 years, it wouldn't have been worth it. Finally sold the house but then that cost you about 8% + all the repairs. I would have been better off putting all my money in SPY in 2017.
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NoahAg
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In reply to Dan Scott • 4:21p, 6/27/24
Dan Scott said:
I tried renting out my older home for the past 7 years. In the end I barely came out ahead given the effort and stress.
  • First tenant stayed 2 years. It was perfect. Nice couple never called me and left house in great shape where I barely had to spend to prepare for next person
  • 3 months no tenant
  • 2nd Tenant, guy stayed 1 year. I was away in Dallas for work assignment for a year and it seemed like everything needed repairs at this time. Home was in Katy.
  • He leaves right before Covid
  • Home sits empty 5 months
  • 3rd and final tenant at discounted rate after sitting empty so long - Stayed 3 years. Young family left the home a mess.

If not for the massive appreciation in value the last 3 years, it wouldn't have been worth it. Finally sold the house but then that cost you about 8% + all the repairs. I would have been better off putting all my money in SPY in 2017.
Soooo, worth it. And it will continue to appreciate for the foreseeable future. Seems like a lot of time sitting empty. Were you asking too much?

I sold a house in May and already regret it, lol. But I get it. It wasn't in an area like Katy so appreciation was not great, but wasn't flat.

My tenants just moved out of our other rental (which used to be our primary residence) and I'm working on getting new tenants in, at a higher rent than the former tenants. I'm very glad we kept the house, and I don't plan on selling anytime soon.

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sklipes
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6:13p, 6/28/24
Thank you all for the responses and looks like we are heavily leaning towards renting it out.

Follow up question, should we start a LLC or business to manage the property? We would eventually add more houses to the rental portfolio, but would just be the one house for the next few years.
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AgsMyDude
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In reply to htxag09 • 6:24p, 6/28/24
AG
htxag09 said:
AgsMyDude said:
htxag09 said:


If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....


How much has the home appreciated in that same time frame?

Hard to say. Probably around flat, though.


Even a Zillow approximation?
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htxag09
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In reply to AgsMyDude • 8:06a, 6/29/24
AG
AgsMyDude said:
htxag09 said:
AgsMyDude said:
htxag09 said:


If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....


How much has the home appreciated in that same time frame?

Hard to say. Probably around flat, though.


Even a Zillow approximation?

Zillow estimates our area code is up 2% in the past year.

That said, I think my wife is a very good decorator and believe that's part of the reason the house showed so well and we had multiple offers (for purchase and lease) within a couple of days (we also did a Reno about 2 years before). But, we'd have to pay to stage it for it to show as well now.
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AgsMyDude
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In reply to htxag09 • 11:43a, 6/29/24
AG
htxag09 said:
AgsMyDude said:
htxag09 said:
AgsMyDude said:
htxag09 said:


If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....


How much has the home appreciated in that same time frame?

Hard to say. Probably around flat, though.


Even a Zillow approximation?

Zillow estimates our area code is up 2% in the past year.

That said, I think my wife is a very good decorator and believe that's part of the reason the house showed so well and we had multiple offers (for purchase and lease) within a couple of days (we also did a Reno about 2 years before). But, we'd have to pay to stage it for it to show as well now.


I get where you are coming from but 1 year comparing s&p vs home appreciation is a little short sighted but that's all you have for comparison at the moment. So I get it.
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htxag09
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In reply to AgsMyDude • 11:47a, 6/29/24
AG
AgsMyDude said:
htxag09 said:
AgsMyDude said:
htxag09 said:
AgsMyDude said:
htxag09 said:


If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....


How much has the home appreciated in that same time frame?

Hard to say. Probably around flat, though.


Even a Zillow approximation?

Zillow estimates our area code is up 2% in the past year.

That said, I think my wife is a very good decorator and believe that's part of the reason the house showed so well and we had multiple offers (for purchase and lease) within a couple of days (we also did a Reno about 2 years before). But, we'd have to pay to stage it for it to show as well now.


I get where you are coming from but 1 year comparing s&p vs home appreciation is a little short sighted but that's all you have for comparison at the moment. So I get it.

But, to counter your point, simply looking at the last 5 years and thinking homes will increase 2-3x every 5 years is also short sighted, no?

Longer term, like over the last 50 years, hasn't the s&p outperformed real estate?

Again, we held for a reason and I don't regret it. But, in general, Texags acts like it's an absolute no brainer and there are no negatives. So just countering some.
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AgsMyDude
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In reply to htxag09 • 10:02p, 6/29/24
AG
htxag09 said:
AgsMyDude said:
htxag09 said:
AgsMyDude said:
htxag09 said:
AgsMyDude said:
htxag09 said:


If we sold our plan was to put all our equity into the market, the S&P 500 is up 35% since then....


How much has the home appreciated in that same time frame?

Hard to say. Probably around flat, though.


Even a Zillow approximation?

Zillow estimates our area code is up 2% in the past year.

That said, I think my wife is a very good decorator and believe that's part of the reason the house showed so well and we had multiple offers (for purchase and lease) within a couple of days (we also did a Reno about 2 years before). But, we'd have to pay to stage it for it to show as well now.


I get where you are coming from but 1 year comparing s&p vs home appreciation is a little short sighted but that's all you have for comparison at the moment. So I get it.

But, to counter your point, simply looking at the last 5 years and thinking homes will increase 2-3x every 5 years is also short sighted, no?

Longer term, like over the last 50 years, hasn't the s&p outperformed real estate?

Again, we held for a reason and I don't regret it. But, in general, Texags acts like it's an absolute no brainer and there are no negatives. So just countering some.


I wasn't suggesting that looking at the last 5 years is sustainable whatsoever. I was just curious originally about the comparison and timeframe is all.

I don't think it's a no brainer every time.
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sklipes
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5:21a, 8/10/24
Update: After posting this my daughter was a passenger in a motor vehicle accident where she suffered a severe traumatic brain injury. She will have a long road to recovery after spending 6 weeks in the ICU and PCU in San Antonio. She is now in Houston at Memorial Hermann in their neuro rehab program.

Needless to say, maintaining a rental home through this recovery process and having a more immediate need to cash flow is the best choice at the time. House will be listed this weekend.

Things can change in an instant and appreciate everyone's input into my initial question.
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Matsui
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In reply to sklipes • 7:42a, 8/10/24
AG
Thoughts to your family
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