Real Estate Investor · Chino Hills, CA · Member since 2009 · 13 posts · 8 votes
I have a 2 Bed 2 Bath condo that I purchased at auction and intended to flip. However, the condo market is very soft, and it's way past my 45 day rule of ownership. I'm prepared to sell it at the low end of the marke pricet to just make it go away, even though it's now completely rehabed.
My question is would it be more attractive to sell it with renters or without renters? 16 like kind units in the same community have sold over the last 6 months ranging from 70 - 80K. I'll be selling at the 70K mark (maybe less), and have renters lined up at $895 per month. Just because you'll ask... HOA's are $240 per month.
My realtor said this property would easily sell for 100 to 110K, which is why I bought it, and is also why she's no longer my realtor. Well, that and several other reasons.
If renting it out makes it more attractive then I'll rent it out today, if not, I'll leave it vacant. Just want some advice on which is the better way to go with this property.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
If you put a tenant in place then you limit your target buyers to investors. If its vacant, either an investor or an owner-occupant might buy. If you can get a look at those recent sales, they might give you a clue. If most are going to OO's, I'd leave it empty. If most are being bought by investors, having a tenant might help.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
If you put a tenant in place then you limit your target buyers to investors. If its vacant, either an investor or an owner-occupant might buy. If you can get a look at those recent sales, they might give you a clue. If most are going to OO's, I'd leave it empty. If most are being bought by investors, having a tenant might help.
Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
16y
RD- You're learning at least 2 things here.
1. Realtors are not to be 100% trusted
2. Condos suck, imo.
Now that I've said that, ditto to Jons' comment. Try hard to find an owner user. At the same time advertise it as "deliverable with tenat in place". That covers both options. Can you find more renters at $895?
If you don't get your asking price within 2 weeks, drop the price and continue till sold, or give up. Rent it and keep it. However, I don't hold out much hope it'll get any better for awhile. Sorry. You should've found BP before you bought it. I, and others would've steered you the other direction. Rich
Hard Money Lender · San Diego, CA · Member since 2010 · 6 posts · 6 votes
16y
Try to sell w/o the tenant. If you can't sell it for the price you want, cancel the MLS listing and put a tenant (carefully screened) and try again to re-sell after the lease is up. Investors will be skeptical of the tenant you put in because there will likely be very little payment track record.
You should also be asking yourself, "what is the opportunity cost of having my funds tied up in this property." Or what will be the opportunity cost of your time in dealing with the "TNT" - (tenants N toilets).
Condos are awful for rentals because the HOA dues eat you alive and go up much faster than inflation.
You didn't mention this - but what is the owner occupancy ratio of the building? Does the HOA have reserves ? (if you don't know, ask for a report). You don't wnat to spend a lot of time finding a seller only to find out FHA or a conventional lender won't fund it because the ratio is off or the HOA is in trouble.
And...consider seller financing. You may find someone with a decent downpayment willing to pay a bit more because you'll carry back a reasonable note. Once you write the note there are a number of companies you can "factor" the note through and get a decent amount of cash back from.
Real Estate Coach · Highland, IN · Member since 2009 · 151 posts · 77 votes
16y
RD
I suggest that you try to sell it w/o a tenant, as was referenced above... however, I would market it to the cash buyers in the area. Any Realtor worth their salt can get those off the MLS, as well as your title company. Zip together a good marketing piece and shoot it off to the people who are buying... ie the cash buyers.
Now for those people to be interested, its gotta be a deal. just a thought for you
The MLS is the route of last resort for us... The last 7 houses we sold never hit the MLS. Our Buyers list and direct marketing to cash buyers move them way quicker than the MLS ever could.
Homeowner · Dalton, GA · Member since 2010 · 108 posts · 13 votes
16y
as all above have stated they would have steered you clear it is true they watch out for us if we ask they will help you tear it open and decide if you want to go for it or not based on numbers and formulas not just the initial $$$ signs we see in our eyes thanks BP members again Sammy ( Dewayne)
Real Estate Investor · Chino Hills, CA · Member since 2009 · 13 posts · 8 votes
16y
Thank you everyone for your responses. Here is the property update. I lowered the price, convinced my realtor to take zero commision, and sold it to a cash buy within a day of lowering the price. I'll take a 10K hit but I free up a lot of cash to reinvest. Lessons learned, condos suck unless you have a buy and hold strategy. I've done very well with everything I've flipped this year, but losing money just one property, even though it's small, is an eye opener.