Home News I’m 73 and on Social Security. I make about $1,000 a month renting my second home in Florida. But costs are rising. Should I sell my rental?

I’m 73 and on Social Security. I make about $1,000 a month renting my second home in Florida. But costs are rising. Should I sell my rental?

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I am 73 years old and have two homes in Tampa, FL. I live in one and rent the other.

I paid $245,000 at 2.75% interest on what I owe. It has 4 bedrooms, 2 baths and is very quiet as it faces the wetlands. I’ve also spent over $50,000 on improvements, from landscaping to replacing water filters to furniture in individual rooms, ready for long-term rentals.

Rentals are very easy to fill, but I’m 73. Utility bills are rising rapidly. There were so many extra costs to handle the rental, including the front lawn he had to replace for $1,600 and the air conditioner for $650. He also had to spend $5,100 in legal fees to evict the tenant. We also worry about possible damage from a hurricane, and property insurance is out of our hands in Tampa. Homeowners insurance for rental properties increased from $700 to $1,000 per year.

On a deeper level, I also worry about the world going into recession. If he waits too long, the value of the house will drop by 20% and he’s afraid he’ll lose his money. And with inflation, it’s going to be difficult.

I still have outstanding payments on the main house I bought brand new in January 2020. It’s my dream house. I’m renting his 3 bedrooms so I can cover my mortgage payments and utility bills.

My question is, should I sell my rental property to pay off my first home?

My Social Security is only $2,890 a month. Selling the rental property would pay off his dream home, but he’s only left with $80,000.

What’s holding me back is that the interest rate is only 2.75% and I’m spending tens of thousands of dollars to complete the rental.

When the time is right, we will set off $1,000 per month from your rental. I like the people renting from me now, but I can’t find a property management team to take on a non-traditional co-living house with four different leases. I feel the need to act quickly.

what should i do?

signed,

stuck in tampa

big move‘ is a MarketWatch column that looks inside and outside real estate, from searching for a new home to applying for a mortgage.

Questions about buying or selling a home? Want to know where your next move is? Email Aarthi Swaminathan at [email protected]

dear troubled,

We have come across one of the biggest perceptions homeowners face when entering the long or short term rental market.

with rent just go upAlthough not as fast as it used to be, renting out property seems like a great idea in theory. It certainly feels like a great business decision.

But it comes with a personal burden and an increasing financial burden.

Due to rising utility bills, Insurance feestorm risk, home wear and tear, and the potential for bad tenants.

With a 2.75% interest rate, you’ll feel like you’ve made a great purchase. Low interest rates in this pandemic will help you in the long run.

But you said you were worried the world would go into recession and property values ​​would fall. At this point, everyone is wondering where the economy is headed and housing seems to be in recession.

So here’s an idea: why not wait?

We don’t know if the economy will collapse, if house prices will crash, if mass layoffs are about to occur. Now, he doesn’t have to give up a service that consistently earns him $1,000 a month.

However, here’s the deal. You need to make sure that renting will still make financial sense a year or two from now.

First, list all your expenses and see if you can still make a profit. This takes time. Legal and insurance costs associated with future tenants, insurance premium increases, etc. must be considered. If you plan to continue to be profitable a year from now, leave it alone.

If maintenance is a hassle, here are some suggestions. Hire a part-timer, or a young relative you fully trust to help run the property as a rental. It may help you to

But if that’s not the case, and if the rental isn’t doing you any good, it may be time to let it go.

It’s time to sell when your profits have shrunk significantly or are close to breaking even. Yes, I’m giving up on a valuable second home. Yes, you can sell it in a few years. Yes, we can wait and see how the market unfolds.

But let’s consider another way. If you haven’t cleared your money, sell your rental, let go of your frustration and your contract with the lessor, pay off any remaining debt on your dream home, and keep that $80,000 of his as a buffer. . Would you like to.

The older you get, the more money you owe to your home, the more annoying it becomes dealing with renters and all the other things you mentioned. and less energy to deal with problematic individuals.

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