Should I sell it or rent it?

Question

Hi,

A while back, we moved from a small Ranch Style home 7 miles from Holden Beach NC, ( 3 bed 2 bath ) which is worth around $240,000 today. We took out a loan for the price of $107,000 in 2001. It needs to have some big oak trees cut down, probably around $7000.00 due to the size of them. They are just too close to the home. We owe $40,000 on the home right now and are making monthly payments of $760.00.

We own the home that we live in now and do not have to make payments. We also own 2 small condo business rental units which bring in $2000.00 per month total. They are 1000 sq. ft. each....... We are trying to figure out what to do with the Ranch Style Home....... I am not sure that it can rent out for enough money per month to make it a good rental. People are used to paying around $1000.00 to $1200.00 for rent here, and I wouldn't want to pay $2000.00 plus per month for that house since it is only 1,350 sq. ft. ...... How much should the rent be right now, national median?

It is in a great location but I am not sure what to do with it..... I would like to have as many properties as possible before I retire, just like a lot of others. I don't want to have sellers remorse if I get rid of it....... What would you do in this situation?

Thanks

Mary Jay · Answer

Lets say you sold it. Got 200K in profit.

What are you going to do with that money?

Are you going to buy 5 other properties that cashflow?

Or are you going to put it in the bank?

Where I live (Phoenix) you cant touch anything below 375K. The rents are going to be 1.8K if not less...

I think before you sell, figure out where you want to buy and if there is anything decent that will cash flow

Nathan Gesner · Answer

I agree with refinancing. Your payment is way too high for what you've got. I think you'd be better off selling it and moving the money into a couple properties that will cash flow and move you forward.

Mike Lynch · Answer

Thanks!We have been getting the house fixed up with new roof, appliances, some flooring, etc. Taxes are $1300.00 per year. Mortgage is $760.00. So, I guess our holding cost each month is about $868.00. We would get about $332.00 each month in profit. We might be able to get higher rent, but I am not sure. ....... Lets say we made $300.00 per month. Is it worth it?

Mike Lynch · Answer

I would say that 4 years ago, $1000.00 per month rent on that home would have been fine. Now that all properties around here have doubled in value, it will be impossible to get $2000.00 rent for that house. ...... Junk Singlewide mobile homes are going for around $100,000 dollars on a half acre of land. ..... So, if we sell now and get $200,000 about all we can buy is junk........ I am pretty confused as to what to do or how to purchase more rental properties.

Theresa Harris · Answer

What have you been doing with the ranch style home since you moved out 'a while back'?

how much are all of your costs for the ranch style home?  You mention mortgage is $760/month, but what are taxes?  If taxes are $200 per month, even renting it at $1200/month isn't bad.

It isn't about the number of rentals you have, but what you are making on them (both paying down the mortgage through rent and cash flow).

If you sold it, what could you buy with the profit?  What are the tax implications?  If you just moved out, would you have to pay capital gains or not?

I don't think refinancing would be worth it between the costs to do that and the amount of rent you'd get.

Larry Turowski · Answer

@Mike Lynch Sell.  If it won't get much more than 1,200/mo and it is worth 240k then there are much better things you can do with that money.

Should I sell it or rent it?

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