Hey folks I'm brand new here. I've recently inherited a house with my siblings and have found bigger pockets in my research as I try to decide whether to rent or sell it. Since then I have been immersing myself in the podcast and have become interested in the idea of buy and hold real estate as a path to income replacement. The house was built in the 80's and hasn't seen many updates since then. It is located on the west side of the lake on a quiet street. Any tips on how I can approach thinking about whether this would make a good rental to hold on to or should I think about selling and investing somewhere else? Thanks in advance.
ask yourself the following questions:
-if it was a rental what would it rent for (check craigslist for similar rentals in your area)? what would all your expenses be? rent - expenses = monthly cashflow
-if you sold it how much do you think it would sell for (check Zillow to see what similar properties in your area have sold for)? how much would you get after real estate agent fees, taxes etc?
as an example, lets say that if you rented the property you would get $400 per month in cashflow, and if you sold it you would get a lump sum of $150,000.
the question then becomes would you rather have $400 per month and a property you could possibly sell later, or would you rather have the $150,000 to invest however you want right now?
To piggyback on what Josh said above - an additional thing to think about is: what can you put into the place now to make it worth 3-4x that on a sale after that upgrade or repair is done? For example - will a hypothetical $10k of new windows, fence, roof, exterior paint and/ or an HVAC net you an extra 70k list price?
Thank you for your responses. Would a real estate agent typically be willing to give advice on what repairs can be done in order to increase value?
Hello @Brandon Saimo ! Yes, most investor friendly real estate agents would be willing to help you analyze this situation and make suggestions.
renton in general and skyway (west hill of renton) are some of the best up and coming areas left in the area. I'm biased toward buy and hold so thats what I tend to recommend, but given the age of the home, hopefully its systems are in good shape so you could do some low cost cosmetic upgrades now, operate it as a rental for a few years and let the area appreciate, then do another round of upgrades more focused on resale value, then sell it. Given your family/group ownership its probably a good idea to use a property manager unless all siblings agree on how to split up maintenance and management duties and any additional compensation for that effort.
If you decide to rent it out, even with a manager, get familiar with WA and king county landlord tenant laws. You aren't in seattle which is a good thing, however renton has passed a few rules around source of income (now eclipsed by statewide similar rules) and they are probably going to adopt an inspections/licensing program, though from what I have heard it will likely be designed to target problem properties and not be a blanket program like seattle has.
Check up on the zoning and see what plans the city/county may have for the area. If there is an upzone planned in the next some odd years, thats another good reason to hold.