I bought my townhouse in Homestead, Florida in 2018 for around $150k. It’s a 3 bed, 2.5 bath with 1,459 sqft. My interest rate is 4.75%, and my mortgage is $1,271/month. Unfortunately, the HOA is very high at $550/month.
Right now, I rent it out to a great Section 8 family for $2,500/month, so after the mortgage and HOA, I cash flow about $679/month.
When I bought the property, my long-term goal was never really to live in it permanently — even though I did for a few years. The plan was always to eventually sell it and use the equity toward my forever home.
Currently, Zillow estimates the value between $274k–$304k, and since I’ve made some upgrades and added new appliances, I think it could realistically sell closer to the higher end of that range.
Since moving back in with my parents last year, I’ve been able to save a significant amount of money, which I’ve been keeping in a Chase HYSA.
Lately, I’ve been wondering what makes more financial sense: should I sell the townhouse, take the equity, and let it grow in a HYSA/brokerage account for the next 3–5 years before using it toward a down payment on a future home? Or would I be better off holding onto the property as a rental?
What to do with investment property
byu/exit2_dopeboy inpersonalfinance
Posted by exit2_dopeboy
4 Comments
What is the home worth now?
Have you lived in it for 2 of the past 5 years?
Your goal is to model the appreciation value of the property vs the interest rate yield of an HSA.
No one is going to guess at the value change of your home in 3-5 years
Figure out what you’d net after the sale – all expenses. Let’s say you net $130k, you would make under $5k per year in a HYSA. Right now you’re making $8,100 plus appreciation.
Assuming $679/mo is all profit – that’s $8k a year in profit. Which is taxed as income. Plus 1 water heater or HVAC or bad tenant or 2-3 months vacancy will eat up in a heartbeat, not to mention government meddling and section 8 inspections. And yes, I know because I’m a former section 8 landlord who regularly had them in there demanding crap like a barely chipped tile needing full replacement.
What do the rest of your finances look like? If it was me, $8k per year isn’t enough to deal with the headaches of being a landlord. I’d sell.