I trusted my realtor and was mislead and paid $30k more than what the house is worth. What is my exit strategy?
I've just been stationed in New Orleans and this home is my primary residence. The idea was to rent it out in about 3 yrs once I rotate to my next duty station. I paid $210k should have paid $180k. Was told by realtor, retired military which was why I trusted him, rents in the area are $2,000 a month, actually only about $1,500 a month.
If I were to get $1,500 a month I'd break even. Am I to just hold this property and hope that one day the values will rise in the neighborhood or is there another exit strategy for me?
What area of NOLA is property located?
It is on the Westbank in Terrytown. Gretna, Jefferson Parish.
@Eric M. If I am to understand the situation correctly, this is currently your primary residence and is going to be for the next three years?
If that is the case, there is nothing that you need to do in the short term but wait it out. When you get within six months I would see where your value is and what rents are at that time. Unfortunately you may not see a 15% value increase or a 33% rent rate increase. And that value would get cut by the sale commission and closing costs if you sold as well.
As an aside, I would contact the agent's broker and at least file a complaint with them. They have a duty to represent you in good faith and it looks as if they did not.
If you do hold it as a rental, figure out what the highest rental rate that would be possible for that property is.
Not putting it on Craigslist, but more like an insurance placement due to fire, visiting nurse, Airbnb, etc and only market it to those people (and furnished?). You may be able to make lemonade out of the situation through those avenues.
Ryan, you are understanding the situation correctly. I'll take your recommendation and contact the broker and we will see what the market does in the next 2.5 yrs. Thank you very much.
Hey @Eric M. . I am sorry to hear that. Your realtor should have provided you comps to justify what he was telling you and the offer should have been conditioned upon appraisal so that if the appraisal came back less than the contract price you could have asked the seller to reduce to that price or walk away from the deal. Unfortunately as Ryan mentioned there is not much else you can do besides what he suggested.
We are expecting a strong real estate market here for the next few years, but things have softened a bit and appreciation on the Westbank is sluggish. Rent prices keep rising and that trend will continue for some time but they may not increase enough for what you need.
What condition is the house in? Any chance you could make some improvements at some point to increase the value?
Hi Braden. Thank you for your input. The house was dated. Everything original from the 1990's. I am making cosmetic improvements such as paint, new flooring, and updating fixtures. I had the two full baths remodeled with new tubs and tile to the ceilings, and installed an alarm system. The contractor that did my bathrooms suggested I knock out two walls in the master suite to create a walk-in closet in the master and rearrange the bathroom layout. What suggestions do you have for increasing the value?
Is NOLA a "safe" market for me to do out of state rentals? I will be here til 2019. If so where in NOLA should I buy and hold?
Hey @Eric M. . Updating the kitchen and bathrooms, as well as the layout can certainly increase the value, but you have to be cautious and be sure to not overdo it for the neighborhood. Each and every neighborhood has a maximum value where the price tops out. You never want to be the biggest and/or most expensive house in the neighborhood.
NOLA has a great rental market. If you are looking to buy rental properties I suggest multifamily properties in areas where you can get at least $1 per square foot if not more.
Orleans parish has always been predominantly rentals as opposed to homeowners. Right now it is at about 53.1%. See here - http://www.towncharts.com/Louisiana/Housing/Orlean...
This also has some good info - http://www.datacenterresearch.org/data-resources/w...
Hi @Eric M. ,
Did you pay cash or get a mortgage? If you got a mortgage did the bank get it appraised before they signed off on it? Banks are not in the habit of lending 30K more than a house is worth. Where are you getting the new value from?
Note, I am not trying to defend the agent by any means. I'm just hoping your new information is incorrect and you are in much better shape than you think you are.
Thanks for the information. I will start looking into Orleans parish for some Buy and Hold properties.
I used the lender that was with the realtors agency, trusted the agent to choose my home inspector, and the property appraiser. I was later educated on how they all work together to get a cut of the deal. The lender has since sold my mortgage to a different agency. The true value for my home I learned from another real estate agent, spouse of a co-worker, and it was supported by my neighbors and Zillow. The neighbor I met tonight, two blocks up the road, has a home that is 4/2 built in 2016 and he paid 15K more than my 4/2.5 built in 1994.
"Everything is going normal" (Pat Hiban) . Getting hustled like this is actually strengthening my marriage. It also led me to BiggerPockets and my neighbors have rallied around my family giving us a since of community.
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