I’m currently holding onto 2 properties in Montclair, NJ and debating on selling them and move into another state with better weather in the Midwest and house hack over there.
My question is should I refinance these 2 properties. Use that money to pay for renovations and upgrades and then sell or just sell outright now as refinancing will put more money on the backend and it wont make much of a difference.
The renovations I’m thinking about doing is finishing both basements and adding bathrooms which can be an expensive job. Any insight would be helpful
Thank you in advance
Hey @Jonathan Rivera ! I guess it's really a question of will those repairs you'd make worth the money, time, etc you'd spend, and would they net more in a sale? I would really comp out other sold properties in the area that perhaps have finished basements and the amount of baths you're looking to end up with. Do those sales prices warrant the money spent?
If you were to sell those two as they are and still net what you need to begin you're new plan in the Midwest, I would say maybe the effort in refinancing, renovating, etc isn't worth the squeeze. But, it really is about what will get you toward your goal.
Run the numbers factoring in property management and costs to buy and sell the properties. How much more will you get with finished basement and will they be a separate unit or add space to the existing rental?
Hey @Jonathan Rivera , I'm a local realtor and budding HOLD/BRRRR investor in your area (properties owned in Glen Ridge & Montclair currently). I think there are a lot of factors into deciding what your best decision wil be with your properties, but generally speaking the market is very strong in Montclair right now and may be a big influence in what path you choose.
@Jonathan Rivera if ever you decide to sell, please let me know. I live in Montclair and in the market to buy.
@Mikael Winkler thanks for your insight. The numbers may work if I do high end finishes to the place but that would warrant a big upfront cost. Thanks again
@Jonathan Rivera - Go with your gut. If your gut says sell and start over then do that. You'll end up doing it anyways the first time management screws you or you get a nasty tenant turn. Save yourself the refinance cost and time.
@Scott Stewart yes the red hot market is making me want to pull the trigger. Thanks for your insight
@Theresa Harris . Thanks. I’ve been running the numbers and it’s so close only because the market changes depending on what block you live on around here. Thanks again!
@Crislie P. Thanks Crislie. Nice to meet a local. Let’s stay in touch!
@Michael Ablan . Thanks. So true. My gut has never failed me yet and even it did it was worth the experience I earned. Thanks again
@Jonathan Rivera absolutely! Good luck with whatever you decide to do and moving forward in your journey.
Still a bit new to real estate but what is it about refinancing that would be difficult? With those two properties, you are bringing in monthly cash flow so why would you sell?
Or is it because you believe properties are so hot right now that you want to sell at the peak of the market?
Thanks so much!
I would use an excel spreadsheet and simulate each scenario up to 5 years.
Scenario 1. Sell with without any repairs - closing cost, buy new property and rent it out + appreciation
Scenario 2. Do the 2 basement and sell it out for higher value ( Ask your realtor if additional bedrooms are increasing the overall value. If it cost you 10k to add a bedroom and bathroom and this add 20k in overall value than is a good investment. But check how much refinancing cost you )
Scenario 3. Keep the 2 , refinance, add basement, and rent it out for higher rent. + Appreciation in your market
When you simulate everything on a excell spreedsheet you should get a clear idea which scenario is best. This is what I always do when I have a difficult decision. You have to translate everything into numbers and from the numbers you can make a decision.
Without proper numbers in your description no one can give you a definitive answer.
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