Good morning, I have a 2 Bed 2 Bath townhouse that I purchased last December. I am in the military, and was expecting to keep the house for another 2 years before I have to decide whether to rent or sell.
Recently I have came down on orders to move to Texas (begenning April 2019) and I have to make a decision whether to sell or rent. This property was my first purchase, and I regret not researching and studying about real estate before purchasing. As I read and study real estate investing, the numbers on my townhouse just looks worse and worse. I need some help and insight on how I should deal with this property, so below is the numbers:
Purchase price 392k, No down payment (VA)
Mortgage + HOA: 1950 + 500
Comparable rentals in the area runs 1800-2200, and there are now 6 units in the same townhouse complex on sale (4 in escrow) running 405k - 465k.
I am looking to pay at least 500 out of pocket if I am able to find a renter at 2k. If I sell, I might be lucky to walk out with no loss. Please share your thoughts on my situation, what you would do if you were me..
Thanks for your time and knowledge
@Han Yu , where is the townhouse located on the island?
@Kevin Hunter , It is in Kapolei, near the Kapolei Middle school
@Han Yu , based on your numbers and the rents, I would suggest unloading it and re-attacking in Texas. I have wanted to get into the Hawaii market since I got here but the numbers really don't work for me. The rents are too low RELATIVE to the purchase prices. That being said, there are things you can do to offset your selling fees....negotiate with your realtor for a lower commission, try selling by owner, etc....
I never like the idea of selling, but in this case I think it is the right move. Just my two cents.
@Kevin Hunter Thanks a lot for your honest opinion. I get depressed everytime I look at those numbers, thinking in retrospect what I should have done. A BP member brought to my attention that I could take a Lease Purchase route, in which case I would be able to find a tenant/buyer and possibly save on the commission. Do you know if there are market for it in our area?
@Han Yu , absolutely, especially in our line of work. One thing you need to remember though is that then you are the bank. All the stuff that banks deal with, late payments, sob stories, becomes your problem. I suggest talking to a real estate attorney to work through the contractual things you will need to consider. If you want, PM me and we can walk through it together.
@James Chun II Thanks for the advice. Would you mind if I sent you pm?
@Han Yu yes, please do
@Han Yu I'm an investor and realtor on Oahu. I'd be happy to take a look at your numbers, if you'd like. I just sent you a PM.
Yes, try a lease option. You should get a least 10k down and can charge higher than monthly rents and an option price that's a bit above market value if you do it properly..... as long as you don't mind keeping the mortgage in your name while you pursue other ventures.
@Han Yu Aloha Han, I've been in this boat before. On the upside, there doesn't seem to be much inventory in your complex as there are (3) in escrow right now with no other units active. I would FSBO it closer to your move date since its near summer where most people like to move (FSBO with a 2.5% courtesy to the buyers broker). The last one sold at $399K on 10/26/2018. I don't think that you will be completely underwater and there may be some small play to minimize your losses (hopefully break even or a small nominal gain). Please let me know if you need assistance, I'm willing to help - pro bono. Thank you for your service! Blessings, Joel