San Jose area - Sell or keep rental property?

8 Replies

Put my house up for rent, and have so far 5 potential tenants telling me that their landlord is taking the house back to sale. Am I missing something? Is it a good idea to sell now for a nice capital gain?

The house's current market price is $680K, and rent is $3300 per month.

Thank you,

@Albert Ng

It depends on what your long term goals are. Could you cash out now on a decent profit and then reinvest the money as down payments and cash flow even more?

Originally posted by @Albert Ng :

Put my house up for rent, and have so far 5 potential tenants telling me that their landlord is taking the house back to sale. Am I missing something? Is it a good idea to sell now for a nice capital gain?

The house's current market price is $680K, and rent is $3300 per month.

Thank you,

 I have a cash buyer if you decide to sell

Albert,

Before you sell, do you have a plan on what to do with the money? Transaction cost is roughly $40k, not including staging and other miscellaneous stuff that you have to prep before selling. $250k - $500k tax-free money is nice, but losing almost $50k just to sell the house may not make financial sense.

Cash-out refinance or obtain a HELOC on the property prior to renting it out might be a good idea, but it seems kind of late now. It comes down to your personal financial situation. Just keep in mind that real estate has made a lot of Bay Areans wealthy. By selling, you don't know if you have killed the golden goose until later. That's why hindsight is always 20/20. 😊😊😊

Good luck with your decision. Whatever it is, I hope it's the right one.

@Albert Ng

Whether selling or for renting, do the numbers including all costs, and that will give you a fair idea on what to do. Good luck.

Yes many people are selling for a couple of different reasons depending on the area. What I am seeing in our areas are a couple of reasons.

1) accidental landlords can finally sell- those who were waiting for the market can finally sell and get out

2) relocation and cashing out the profit- those that are relocating and have no desire to move back to the area are cashing out the profit of 40k ish and running.

Everyone has their own opinion. Yes we have great equity in all of our properties but I see them going up even further. Even the hoa at our south carolina houses drives me batty. I am doing a cash out refinance (leaving 25%) to buy two more houses in california. For me continue to grow my empire is more than a 40-130 pay out. 

also don't forget capital gains, and depreciation repayment. 

Remember it is each their own. Figure out how much you would get out of the house. Do you have a better place to invest the money and where you see the house going?

Originally posted by @Minh Le :

Albert,

Before you sell, do you have a plan on what to do with the money? Transaction cost is roughly $40k, not including staging and other miscellaneous stuff that you have to prep before selling. $250k - $500k tax-free money is nice, but losing almost $50k just to sell the house may not make financial sense.

Cash-out refinance or obtain a HELOC on the property prior to renting it out might be a good idea, but it seems kind of late now. It comes down to your personal financial situation. Just keep in mind that real estate has made a lot of Bay Areans wealthy. By selling, you don't know if you have killed the golden goose until later. That's why hindsight is always 20/20. 😊😊😊

Good luck with your decision. Whatever it is, I hope it's the right one.

You hit the nail on the head. I'm in a perfect position to sale (tenant damaged house, insurance claim, ... the whole nine yard, and insurance pay for me to remodel the house - long story, let's get coffee or lunch sometime, my treat, and I can share with you the whole experience). I was consider between rent & sell, and decided to rent instead of sell because I have no plan on what to do with the money after I cash it out. There is a strong rent market in San Jose, so it's nice. However, out of about 10 potential tenants that I talked to this week, 5 said their landlord want the house back to fix up & sale. That was kind of a bit alarming to me.

   

Originally posted by @Elizabeth Colegrove:
Everyone has their own opinion. Yes we have great equity in all of our properties but I see them going up even further. Even the hoa at our south carolina houses drives me batty. I am doing a cash out refinance (leaving 25%) to buy two more houses in california. For me continue to grow my empire is more than a 40-130 pay out. 

also don't forget capital gains, and depreciation repayment. 

Remember it is each their own. Figure out how much you would get out of the house. Do you have a better place to invest the money and where you see the house going?

In my opinion,  the Bay Area housing price won't jump up like the last couple of years (buyer maxed out their purchase power). It might even drop slightly (maybe around 10%) if the fed raise interest too fast, and cost of borrowing increase. The property value has been improving nicely for me, so I was thinking of selling it to lock in the profit (trying to time the market :D ). I decided against that. However, was surprised to heard so many landlord taking back their property to sell. 

Albert Ng As mentioned earlier it would depend on your goals and strategy. Being a victim of the 2006 crash I would sell it. I think we are approaching another peak in prices if we haven't already. But everyone is different. After the crash, I invest out of state for cash flow only now.

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