[quote=Panderso]Edit to my last comment: I just checked the Zillow rental estimate again and apparently cash flow would be $100-$200 a month, not $300-$400.
Bewildering – yeah, we’ve considered child-care in our budget. That’s why we have a cap on what we’ll buy. It is expensive and unfortunately we don’t have immediate family in the area so no free day care. :([/quote]
I would not count on your condo being cash flow positive 100-200/month, at least for the 1-3 years. In fact, I would consider that you count just breaking even at least when you first start out as a more realistic outcome.
People move, things break, property taxes/hoa/insurance goes up, rent might come down in the future. No one ever assumes 100% occupancy. Also, you and your husband might not want to deal with being actively involved in it’s management so add another 5-8% in management fees if you want someone else to do it. Also, unless you and your husband plans on doing the maintenance yourself, anytime something breaks, in all likelihood, you will end up running negative that month. Calling a handyman to simply replace a leaky faucet will set you back around $100-200, including the cost of the faucet itself.
On one of my condos, the A/C just went out. I got lucky. The repair bill was only around $200. It could have been way worse. On another SFH rental, the dishwasher went out. And a few months ago, another condo the fridge went out. And last month, I got a $200 repair bill on something that broke on a condo that is managed by someone else. I personally don’t mind dealing with all this, because I like being a landlord, and across all my rentals, the numbers still look really good. I wanted to give you a realistic picture right when you are starting out, and you need to consider a cushion in your budget for this. This is not to scare you into deciding to not keep the condo, but I think you need to consider a worst case scenario, and plan for that to see if you are willing and able to juggle being a landlord and if it fits into your family’s financial goals.
Keep in mind also, that since it’s your primary home right now, capital gains will be totally exempt for you guys (up to $500k for joint filers) if you do sell. That’s a pretty big gift from the IRS. And with that nice chunk of cash, you could (in theory) invest it elsewhere. Plenty of ways to skin the cat. You could also try renting it out first and then decide to sell and still get your capital gains tax break, if you do so within the rules regarding the timeline…
