Real Estate Investor · Aiken, SC · Member since 2008 · 5 posts · 0 votes
Help me do the math here.
Background:
My wife and I life in Palm Harbor, FL. The last two years real estate has been very hot here. We want to move to Aiken, SC to semi-retire and invest in real estate. For family reasons we were unable to do that until now.
Our house is on the market at a reasonable price. However, there are lots of houses on the market and few buyers. So we're weighing the options if the house doesn't sell.
Facts to consider
1. Our monthly expenses on the house are around $2,700.
2. Monthly rental would probably be $2,500 to maybe $2,800.
3. We can afford to buy a condo or a house in Aiken without selling this one.
4. We have a lot of equity in our current house.
5. We really don't want to stick around another year in Palm Harbor.
6. It doesn't look like "the bubble is about to burst" in terms of pricing here but houses are taking much longer to sell.
7. Our current house is very attractively decorated but has some elements that need updating (tile floors, bathrooms). We've done all the inexpensive fixups so the next step would be major tiling, gutting bathrooms, etc.
Dayton, OH · Member since 2008 · 517 posts · 17 votes
20y
Here is what you need to consider:
- When you say expenses, do you really mean cash flow? You might pay a $1000 mortgage, but your interest expense might only be $250 (since you have so much equity). If you rent your expenses will (probably) include mortgage interest, property taxes, and any utilities that you plan on paying for a renter.
- Is your neighborhood a buyer's market or a renter's market? It will be difficult to rent if everyone moving into that neighborhood is buying.
- Don't bother with the major fix ups.
If you can sell it outright then that would be my suggestion. If the house doesn't sell then you can offer owner financing / land contract for the property. This is kind of like renting, but it appeals to people that want to be property owners and don't have a lot of cash / credit that is good enough for a conventional loan.
Real Estate Investor · Aiken, SC · Member since 2008 · 5 posts · 0 votes
20y
You raise some good points, juz.
1. I guess my terminology is incorrect. Yes, I probably do mean cash flow. Here are my expenses:
$826 Interest on the loan
$750 escrowed insurance, property tax
$80 pool service
$100 lawn service
$50 HA Assn dues
$50 Home Protection Plan
$1856 total monthly expenses plus unexpected expense and rental management fees.
2. This area is almost entirely a buyer's market but there are a few renters here. A doctor is renting a house smaller than ours for $2,300.
I guess I'm asking if I should be afraid of renting. We might not get any more than $2,300 in rent. We might only rent it 6 months of the year. Renters might and probably would cause damage that would need to be fixed before eventual sale. Against that I have to weigh our desire to move to the new area and possible appreciation of the property over the next year or so. We *can* afford to carry the property even if it isn't rented. We'd prefer to sell. Would you consider renting a viable option under these circumstances?