Hey there! I live in San Diego too (work in PB) and hoped you had advice about whether I should sell or rent out my house. Before Covid, we were all about renting especially with the housing prices in SD. I’ve never done it before and nervous about getting a reliable and consistent renter with Covid and a recession. We’re buying a bigger house for the fam and the market is super competitive and great for sellers. Two friends sold their houses in a day and both got 40k over there asking price. We’re leaning toward selling bc if the craziness of Covid and the moratoriums for renters. Right now, we would probably profit $200-300 a month if we did everything ourselves or about $100 to break even if we hired a company. What do you think? Thanks in advance for your advice!
Welcome @Corina!
Can you give some more details on the property? How much would you be able to sell it for? How much would you be able to rent it for? What is your remaining mortgage on the property?
We owe 400k, estimated at 520k but a same style house in the neighborhood just sold For 542k. We saw that rents seem lower since covid so I think a range of 2400-2700/mth would be the going rate.
Our current payment is $2175 but we’d have to hire a landscaper (~$120/mth). We’re moving 10min away so can deal with everything directly, otherwise the property manager estimated a fee of 8-10% of rent.
So let’s break it down. Monthly expenses:
- Mortgage: $2,175 (I assume this covers taxes too?)
- Insurance: $100 (do you know this number?)
- Landscaping: $120
- Maintenance: $400 (Not every month of course, but shit will always break and it adds up. This estimate is below 1%/year of the property value which is on the very low end of maintenance estimates)
So your “net operating income” is the rent, minus expenses. By my math, at best that’s -$95/month, assuming you self manage and get the full $2,700/month with zero vacancy ever.
You have about $120,000 locked up in there right now… so you’ll be paying at least another $100/month to keep that $120K in a property that might appreciate at 4%/year (that’s the national historic number). But on the flip side, you’ll also likely have rent increases going forward as well as earning leveraged equity in the house. I don’t hate the idea of holding it, although the math definitely isn’t great. Any buy-and-hold investment property in San Diego is pretty rough because of the much higher sale prices vs rent prices.
I put together a calculator for this property:
You can see the keep and sell results are pretty close. (Selling assumes you dump 100% of it into the market). But this also assumes you’re self managing it, and a pretty optimistic outlook on future rental income, etc.
If it’s ME, I’m probably selling. Doing tons of work, headaches, taking on risk to get about the same return as clicking a button in the stock market doesn’t seem like a good deal.
If you want to be in the investment property/landlord business, I’d probably analyze a LOT of deals and go find a property where the math is as good as possible, not just the one you happen to own. But if you keep it, self manage it, pay down the mortgage for years, etc I think it will likely also do a great job building wealth for you! 
Thanks, Jeremy for all the great information! You’ve given me a lot to think about and I really appreciate all the time you spend educating me and your community! See you around PB!