Am I stupid to sell my house instead of renting it out?

General
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My wife and I are considering moving from Oregon to NJ to be closer to family. We are considering keeping our home in Oregon, managed by a property manager. The Oregon house neighborhood is amentity rich, in demand, and allows for an ADU to be build for additional rental income in the future. The primary home does not need to be owner occupied to have a rental ADU. Many of our friends in Oregon own rentals and have told us we would be fools to sell this home based on its location alone.

Current house was purchased in 2020 for $312k, 20% down on a 30-year term mortgage. Current PITI is $1450. Current Redfin estimate is $410k, neighborhood comps also in that range. After fees and our $233k mortgage balance, it would be about $140k proceeds.

We would be moving to a higher COL area in NJ with houses in the $675k range with $$ property taxes. We have cash on hand for a 20% down payment.

Otherwise we sell, and our plan would be to put the full equity down on the new house, and have a lower loan amount.

My estimate for current home rents is about $1950 starting. Tenant protections are intense in our town bordering on predatory against landlords. We are concerned about increasing hostility toward landlords resulting in more intense tenant protections in the future.

Our income will be $180k gross, and $300k in retirement accounts for context. We will also have 1 federal pension in retirement.

Current home is older (1953). The home is in good physical condition with an updated kitchen, heating, water heater, newer roof. The home may need gutters in a few years, but otherwise it’s a fairly simple 900 sqft cottage home.

We do not have experience being landlords, especially remotely. We would be relying on a property manager.

Curious to hear everyone thoughts on whether we should keep the home as a long term rental or just bail out, take the cash, and move on. For the experienced investors out there, would the financial benefits of future cash flows and equity appreciation justify the headaches of owning a rental property across the country? Thank you for your thoughts and opinions.

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One thing to consider is that Oregon laws are extremely favorable to tenants. In all likelihood, you’ll have a good tenant and never have to worry about it, but if you get a bad one, your options will be severely limited.

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Hire a lawyer to draft the lease and make it as landlord-friendly as possible.

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Factor into the deal a year of unpaid rent, legal fees for an eviction, and the need to refinish literally every surface in the house - walls, floors, countertops, etc., and to re-landscape. That’s your worst case scenario - and it is FAR more common than you think. Actually, I forgot to include malicious vandalism, like ruining your pipes, your septic, your electrical, and stripping the house of any material of any value - appliances, HVAC, etc. That is really the worst case scenario, and usually, the law won’t do a thing - they’ll tell you it’s a civil matter. You’d never see a penny back.

You’re going to be living 3000 miles away. Sell the house for the most you can get for it, pay no income tax on the profit due to the exclusion, and do what you want with the cash. Personally, I’d consider whether or not you want to put more than 20% down right now, or use the money for something else.

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Just sell it. Renting out houses was a bitch and I lived within 5 miles of all my rentals. Bought all of them before 2016 and the funds from sale woulda taken 30 years to make in rents received. Couldn’t imagine being across the country with a rental and getting a scummy Tennant or just as worse a scummy management company.

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Renting is not for everyone, regardless of your rate. It’s not a matter of IF you will get a bad tenant, but WHEN. I’ve had tenants that weren’t even that bad and they still caused a fair amount of damage. We definitely don’t regret renting our former home, but I’d be lying if I said it was never a headache.

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Selling is usually the right move, even with a low rate. Most properties make terrible rentals, and it doesn’t seem like most people realize how bad they’re screwing themselves letting go of the capital gains exclusion for selling a primary residence

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If you have no plans to return to Oregon, I would sell your home and put the extra cash down on your New Jersey home. There’s no guarantee the market will get better in Oregon.