Should I sell? Vegas

9 Replies

Bought the house in 2012. Remaining balance is 250k on a 3.25% FHA loan, eligible for pmi cancellation in 2 years . Mortgage is $1670/mo including pmi. In two years, mortgage may lower to around $1300 after pmi cancellation and some equity. Potential rent is $1900-2000. Market value is 390k. Tax exempt if I sell now or in the next couple years. This house is in a desirable neighborhood in Vegas and previously sold in 2006 for $700k. Should I sell now and use the equity to add another smaller rental property? Or rent out and see where the market goes? If I sell, it will also improve my DTI ratio and increase my borrowing capacity. If I rent it out, there could still be room for equity in the Las Vegas market, although it could be argued that it is speculating. What would you do if you were in my shoes? Thanks in advance.

@Oliver Martin , isn't what you meant to say:- "there could still be room for equity in the Las Vegas market, although that IS speculating"!?

It looks to me as though you would be marketing it to either Owner-Occupiers and/or Gamblers (they're in the right place though)!

I would recommend testing the market out at $390k, and take it when offered. Then, try to find properties that will rent out for at LEAST 1%/m of your purchase price or more, not the mere 0.5% this one could get. My 2c. All the best...

I would hold and continue to bank the appreciation on an asset with a current value of 390k and positive cash flow now, that will only improve after dumping the PMI, as well as enjoy the depreciation. Your doing well in this property, and you indicate that if you did sell yout would just reinvest into other rental property. So, why reinvent the wheel? I'd keep it and add to your RE in Las Vegas, by buying additional rentals. Long term, Las Vegas will be good to you. I've been there 22 years...it's been good for me.

@Oliver Martin You're locked into a sweet interest rate.  I wouldn't want to give that up.  If the property is in a primo area, you have good potential for additional appreciation.  

However, a different option might be to refi this house into a conventional loan.  See if you can pull out some of the equity and use that as a down payment on a second lower-priced rental.  80% of 390k is 312k.  The difference is nearly 70k between what you owe and the new potential loan amount.  Obviously there will be fees and costs, but this could be a good play depending upon what you qualify for.

Brent Coombs Charlie Fitzgerald Phillip Dwyer thank you all for your replies I am in the process of getting a pre-qual for a larger home as a primary. And once I close that next property then I might test the market on this one. Although heloc is also an option because yes, I would like to keep that 3.25% interest should I decide to keep this property long term. My strategy is fairly conservative and I do not want to over leverage since I know many investors who lost it all in the recent market crash. I am trying to have a mix of free and clear properties, and some with mortgage that I would either sell or pay off someday. For now I am in the accumulation stage but I'm being very careful with my next steps especially in this market. And it's nice to have found BP where I can talk with and seek advice from like minded individuals. :)

Hi Oliver,

I concur with Phil, having money locked up at 3.25% for 30 years is an asset in itself, so you'll want to preserve that, and if you can get money out with a home equity loan to buy one or two more, you'll have the best of both.

You can try Clark County Credit Union for a home equity loan on non owner occupied at 80% LTV.

Jean

Other than your awesome rate of 3.25% I would say sell now. Your homes price range is very stagnant right now and appreciating much slower than the lower priced homes say under $200k. I would be VERY tempted to cash out tax free now and then use the cash to make an all cash purchase under $150k. This will eliminate debt service increasing your monthly cashflow. You will also not be leveraged should the market dip in future years. Also with the lower price range still being in high demand, you will see better appreciation dollar for dollar. I am just playing devils advocate. At 3.25%, and once the PMI is gone you will have great terms should you choose to not sell.

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