Land Lords: I need your advice

[cabri]

If you get estimates below 150K, what are your plans then?

 

[z1ggy]

If you get estimates below 150K, what are your plans then?

I don't think that will happen honestly, but if it did, I like can't sell because it would be a short sale.

Logical plan would be to hold off and have the price reassessed in the spring. I'd do all the things the realtor suggested I do in the mean time, however.

 

[cabri]

So it sounds like rental may be off the table even if no-sale

 

[z1ggy]

So it sounds like rental may be off the table even if no-sale

After hearing multiple horror stories on here, plus the fact if I rented for a few years and the market didn't move at all, I could end up paying for many months of mortgage while the house sits on market...I just feel like it's not worth it.

It sucks to think I'd be willing to spend thousands just to get out of this house.

If I sell it for less than the purchase price, can I write off that loss on taxes?

 

[cabri]

After hearing multiple horror stories on here, plus the fact if I rented for a few years and the market didn't move at all, I could end up paying for many months of mortgage while the house sits on market...I just feel like it's not worth it.

It sucks to think I'd be willing to spend thousands just to get out of this house.

If I sell it for less than the purchase price, can I write off that loss on taxes?

NO !!!

Advantage of at least renting, is that a major part of the mortgage is being covered by the renter.

And other cost always needed for the house becomes an expense write off (insurance/maintenance)

 

[z1ggy]

NO !!!

Advantage of at least renting, is that a major part of the mortgage is being covered by the renter.

And other cost always needed for the house becomes an expense write off (insurance/maintenance)

Understood, but at the end of the day I'm still loosing money, and they could devalue my property by trashing it. Call me paranoid, but I'd hate to end up in a worse spot than I am now.

It's still on the table, it's just not my first choice I suppose. Especially because I've been a tenant and I've seen what the people who lived with me did to the place.

 

[cabri]

Naval NCOs or Officers will be your best bet in terms of quality tenants (unless you trust your coworkers)

 

[z1ggy]

I've decide to relist the house with a new realtor. We are pricing it much lower than before in addition to some small improvements I'm making to the property. I will take a loss of probably no less than $5,000... But I figure if I rent the house long enough, I would end up losing that much money anyway.

I definitely want this thing sold before winter starts.

Here's a question I have, too:
Can I write off any expenses I've had to "fix up" the house to get it ready for sale? I.e, all the paint I've purchased to repaint rooms, the concrete sealing stuff, mulch for making flower beds looks nice, etc etc?

 

[cabri]

No expenses can be written off unless you make a $250K PROFIT on the house

 

[DrPizza]

I'm not sure what you mean by losing money by renting the house - you're gaining equity in the house while you're renting it out. So, while you might be "losing" $200/month, and figuring that it's $2400 out of pocket per year, after 30 years of losing $2400 per year, you've "lost" $72,000. But, at that point, you'll own a house that most likely will have appreciated a small amount, and is currently worth $150k.

Thus, before you call it "losing" money, it depends on how much out of pocket you are each month - my numbers turned out sort of lucky in that it appears that the sweet spot is somewhere around $400-$500 per month out of pocket would be losing, and less than that, in the long run, you come out ahead.

 

[z1ggy]

I'm not sure what you mean by losing money by renting the house - you're gaining equity in the house while you're renting it out. So, while you might be "losing" $200/month, and figuring that it's $2400 out of pocket per year, after 30 years of losing $2400 per year, you've "lost" $72,000. But, at that point, you'll own a house that most likely will have appreciated a small amount, and is currently worth $150k.

Thus, before you call it "losing" money, it depends on how much out of pocket you are each month - my numbers turned out sort of lucky in that it appears that the sweet spot is somewhere around $400-$500 per month out of pocket would be losing, and less than that, in the long run, you come out ahead.

Agreed, and I understand that. I just don't know if a 2 bed 1 bath house is prime real estate for renting or not. Also "losing" $200 a month on average is probably about right, but doesn't factor vacancy into things. Overall though, yes in the long term I'd clearly come out ahead. Biggest issue is that I'm only 27 and I really don't have tons of liquidity. If things go wrong with the house, it means I lose large chunks of my savings or go into debt.

 

[cabri]

Have you checked out the rental market for the type of house?

How long do listings stay open and $$?

 

[z1ggy]

Have you checked out the rental market for the type of house?

How long do listings stay open and $$?

I have, and honestly there were very few 2 bed 1 bath. The ones that were, were generally condo so it's kind of hard to gauge how much more I charge for a home. Generally, they were going from anywhere as low as 800 to as high as 1400. It depends on the area, sqft, etc. I just kind of assumed I could charge no more than 1300, which is basically my mortgage payment. I'd get to break even, but I'd owe 10% or so to a property manager and a bit more to insurance.

So far my realtor told me the last 3 properties to close that I compare to, were on the market an average of 35 days. They sold for an average price of $155k.

 

[cabri]

Consider setting up an option to buy rental; offer 25% of the rent against the purchase.
This may encourage a tenant to take better care of the property.

 

[NoCreativity]

If you are still planning to sell, here are a few things that might help in order of importance (other than pricing it properly which is the most important thing).

1. Ditch the clutter. Seriously. We cleaned out our basement and closets of most things we didn't use frequently and put them in storage (in-laws basement ). Everything that was easily visible was neatly organized. It made the house look a little bigger without all our crap laying around.

2. Clean. House doesn't need to be spotless, but it needs to be fairly clean. Pay special attention to windows and bathrooms. Nothing worse than walking into a bathroom with a bunch of mold and mildew everywhere. It's also not a good look to have a film of dirt over the windows.

3. Open blinds when people are coming through. This goes along with clean windows. It really opens everything up with a lot of natural light coming in the house.

#1 is a big one. We actually got compliments from other agents and their clients on how nice our house looked. We are talking about a 45 your old house with an old kitchen and bath. No real updates in it. As a buyer, it was a huge turn-off to walk into a house and have to weave your way around the junk laying everywhere, avoid touching anything because it was dirty or search for light switches because it was dark (during the day).

Our asking was a bit above comps by 1-2%. Average time on market when we sold was about 40 days. We had several offers at asking after two and agreed to one offer by day 4.

 

[SP33Demon]

Ziggy, what if you rented it out for now and added a cheap addition to the house when you have enough money saved? E.g. another small bedroom + bath? Then your house would be way more marketable. Yes, you'd lose about 15K but it would drastically increase its appeal to buyers in the area to where you may be able to recoup a percentage of that 15K in the form of a higher asking price?