I have a bit of a dilemma and thought I would solicit some advice if you would be willing.
I have a house that we lived in in the Memphis area. When we moved there, it was the top of the market (2007). Consequently, we bought the house right before the market bottomed out. It couldn’t have been helped, as this was the time my husband’s job there began.
I’ve had a tenant since we moved back to TX in 2011. He has been on a 2 year lease every renewal and a bit below market as my husband was in law enforcement and we gave a discount to Police/Fire/Military.
I've been watching the market and it has been slow to come back. I haven't had a CMA or an "official" comps check done in a couple of years, but it still doesn't look like the house is back to even what we paid for it.
I am being advised by a realtor that now is a seller’s market. Tenant’s lease is not up until Oct. 2019. I don’t want to try to sell it with tenants in it, because, as you know, no one takes care of your house like you do. It’s not awful, but they are messy folks, even when they know I’m coming to check on the house and renew the lease.
The fence needs attention after one side was moved. The tenant is holding some of the panels together with zip ties...nice.
It needs interior paint and carpet and a minor engineered wood floor fix.
My question is….I don’t want to miss the market by waiting until 10-2019, selling when the tenant is out. (They have indicated they probably will move at that time.) However, I don’t really want to sell to an investor, though I would avoid all the fix costs and all of the maintenance (termite contract, lawn fertilization, a/c maintenance contract) + taxes and insurance for the next 14 months. I would really like to sell retail, but if I miss the current (better?) market, is it worth paying all the costs in the meantime?
It’s not a huge cost to go there in $$, more so in time. We never hired a management company, as it was not cost effective with rent we have been charging and it is only one house.
Another question: If I do wait til Fall 2019 to sell, should I rip the carpet (up the stairs, living room hallways, bonus and bedrooms—2600sf house) and leave floors bare, (it’s light colored, horrible carpet) to allow buyers to add their own? Or make it “move in ready”?
Trying to keep costs down. I do have a private loan that’s now about 65% of what we paid.
Thanks for any and all experience and knowlege!
Hi Karen, I'm sure you'd like to sell retail because you're thinking you'd make more money, and it's possible, but you have to consider what you're willing to go through to try and get full retail price.
Home buyers want HGTV quality and it sounds like you're going to have to wait until a year from now to start, which is another year of potential repairs to be made.
Also, no one can predict the market, but there are 8-12 year recession cycles and we are in the 10th year currently, meaning when your tenant's lease is up you may find it harder to sell and easier to rent.... maybe, maybe not.
I would personally start by looking at the comps and go from there.
Thanks, Mitchell, I was kind of thinking that might be the way to go...
@Karen Bloom have you asked the tenant if they would like to become a homeowner? With the affordability of real estate in Memphis and the great interest rates available, it would be a great move for the tenant and possibly for you!
We've talked about it from the beginning and he indicated he might like to, but now, it seems his kids are moving out and he wants to downsize.