Should I sell or hold?

[Ricky Priester]

I have a rental property question.  I have a property that I owe 126k on, it is rented but the renter has basically trashed it.   It is a 3 bed 1 bath 1300 sq ft.  I am getting $950 monthly but I owe $839, with escrow.  It would cost me approximately 125-150k to renovate and get top dollar.  That would be $276k to ask for a price of $400-420k minus realtor fees.  Netting around 100-115k.  I also have an offer for $205k right now to walk away, netting me about 79k. 

What do I do?    

Hold the property?

Try to fix it up to sell and make 115k?

Sell now to make 79K?

[Theresa Harris]

Do you want to deal with the renos either getting it back to rental condition or fixed up to sell?  Look at what you can get for a similar price to what your sales price would be and run the numbers.  You can net $79K or put in $150K to get another $50K (maybe less depending on the market and reno costs).

If the offer is a private sale, you'd also save commission on the sale.  I'd be tempted to sell it (especially given the monthly rent) and buy a duplex or another single family rental.

[Jeramiah J Dempsey]

Quote from @Ricky Priester:

I have a rental property question.  I have a property that I owe 126k on, it is rented but the renter has basically trashed it.   It is a 3 bed 1 bath 1300 sq ft.  I am getting $950 monthly but I owe $839, with escrow.  It would cost me approximately 125-150k to renovate and get top dollar.  That would be $276k to ask for a price of $400-420k minus realtor fees.  Netting around 100-115k.  I also have an offer for $205k right now to walk away, netting me about 79k. 

What do I do?    

Hold the property?

Try to fix it up to sell and make 115k?

Sell now to make 79K?

 Hey Ricky,

I think some of your answer would depend on what your future goals are for the property.  What part of town is the house in?  When is the lease up for the tenant, or is he already gone?  Instead of spending $125 on renovations, can you do less repairs to get it in better shape and charge more for rent?  There are not many rentals available in some of the Charleston areas, so with some work you can probably get premium return.  

If you already have an offer where you can net close to $80, then it might be best to sell it and reinvest those funds into a better rental property like a duplex or triplex.  

I'd be happy to discuss more details if you'd like.  Good luck!

Jeramiah

[Matthew Paul]

@Ricky Priester Its called gambling .  You could renovate and the market crashes and lose your butt . You could renovate and the market goes up and make a killing . Or you can sell now and make a  profit .   You have to determine how you want to play it .   Seeing how we are in a recession and who knows whats going to happen , I personally would take the sure thing 

[John Mathew]

@Ricky Priester There is no harm in trying to list as is and see what the market will pay.  You won't know the answer until you have a written offer.  At which point you can decide to move forward with the sale or hold for repair.  Maybe the current market will get you higher than what you anticipate?  If you need further info, reach out to me and I can point you to some contacts I have there.   

[Jane S.]

grab the $79K and run from this mess! It'll take 3 times longer than you think to finish the repairs and finding good contractors is a full timem J-O-B.

[Paul De Luca]

@Ricky Priester

If it requires that much work to get $100k-$115k, I would sell for $205k and net the $79k today and put that money into other projects.

[Spenser Harvel]

Hi Ricky, 

I agree with the above statements. I think that the area of the home plays in a big factor in the return on the property if you do flip it. I still think there are some areas in Charleston that are still very desirable even with the market shifting. So, you could still potentially get top dollar.

However, if you have an off-market opportunity to net 80k it might make sense to grab that cash and go invest in one of these areas where you can get a really high rental return. I would be happy to chat about this further if you're ever interested

[Scott Allen]

@Ricky Priester Sell it and 1031 into something else. 

[Mike D'Arrigo]

@Ricky Priester I'd be tempted to take the $79K and call it a day. A $125K-$150K is a big project and there are no gaurantees. What is your experience level with a project like this and do you have a good crew that you work with and trust?