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Chief
Unless there's something I'm missing, whatever lets you net $3500, right?
I would say it has to net to the 3500 + the interest for you to not lose money
Um, wouldn’t that be your cost of the mortgage all in + the cost of managing the place if you’re not the to manage it? That would be break even. Only you can decide if you’re ok with break even or the +/- of renting it out. You can write off trips to the house to do check ups and maintenance. You’ll also have the cost of the mortgage until you rent it out.
Budget it all out, and plan for the cost of it sitting vacant at least 2mo per year. So whatever the costs per month are x12, but the rental income is only x10.
Not sure how many bedrooms. You could play the do it 2 ways .
Simply do a yearly rental. Ideally you want your rent to mortgage ratio greater than 1. If it's very close , assuming property taxes etc , maybe bite the bullet for now , as rents increase every year. It's only a matter of time before it becomes profitable.
Other option which may work is Airbnb via a management company like vacasa . They take care of marketing , cleaning etc .
If by “losing money” you mean money out of your wallet than it would definitely be $3500+.
If you can manage additional/unexpected costs then I would look at it like this… let’s say the tenant is paying $3000 and you had to pay $500 out of pocket. You are “spending” $500 for someone else to put $3000 towards your home equity (-interest, property tax, etc). Yes, it may costs you a little extra on a month to month basis but in the long run you are building your equity and winning
Sorry should also add some additional context - not sure if we’d do a property management company but I guess the main cost I wasn’t sure about was unexpected home maintenance. Although it is a modern home (built 2007) I have had some random irrigation / plumbing issues in the past that were not insignificant so curious if this needs to be baked into the rental price and how to best estimate.
Whatever is the market rate for that property. If it's 3800 , then it is 3800. If it's 3500 , then it's 3500. In the long run , you'll build equity and the property appreciates and rents go up every year.
It is also a 3 bdrm / 2.5 bath home for reference and the rental estimate in Zillow at least has it at $3730 as a reference point so not necessarily concerned we wouldn’t get the mortgage costs back but really any incidental expenses and additional unplanned maintenance.
Also not for nothing but with the Bay Area move also now paying more in rent than what I was with the mortgage so want to be cognizant of that as well that overall expenses are up so don’t want this to be a money pit if that makes sense.
Chief
Definitely go through a property management company, and make sure that they do in-person inspections of the property at least twice a year (why, as someone who bought a previous rental where the owner had a property management company, the place was a wreck).
Also, I would increase The amount that you would charge to cover not just the property management company but regular wear and tear.
Chief
Technically, you’re benefitting as long as rent > interest, taxes, and insurance – the principal paydown will (theoretically) be recouped when you sell.
From a cash flow perspective, you’ll want your rent to cover it all.