Big setback on first purchase. Seeking ideas to get back up and continue investing

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

1y

Quote from @Chander Sri:

Hi All,

This is my first post. My best friend who is a avid BP member suggested to reach out here for help. So here it goes....

I bought first single family home (2000sqft) 2 yrs ago in Cedar Park, TX area during peak of market craze at 5% 30yr fixed for around $540k (spent about 10K more replacing hvac etc) with monthly payment of $3600-$4000 and the market corrected sharply to a point comparable homes are not selling even for 440k with a nice pool in them. In the next 1-2 yrs I'd like to move out to either a bigger place or a new new city (job related relocation etc). What are some ideas should i explore so that I can minimize the financial loss in this situation especially given I cannot refinance even if the rates were 0% as my property value won't appraise. Looking back I made some clear very expensive rookies mistakes and learnt them the hard way. I'd really appreciate your inputs.

Some relevant info that may help

- I'm expecting a size able bonus next yr from my stock vests (~$500k)

- the house needs flooring to be replace since the previous owners put cheap laminate stickers that are coming off and counter tops and cabinet repaints.

- homes are not renting quickly in my areas and even if they rent its below $2k.

- there is a airbnb in my street which seem to have good occupancy

Thanks in advance for all your suggestions. Pls ask me if you need more information to help with better suggestion. !!

take your bonus, pay down the home and sell it. not much creativity that can be had. if you try and short sell it the banks could still come back after you and it will crush your credit. chalk it up to a very expensive lesson learned - was it driven by FOMO of feeling like you needed to invest because everyone else was making money?

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Chander Sri

OP

Member since 2024 · 4 posts · 2 votes

1y

Quote from @Chris Seveney:

Quote from @Chander Sri:

Hi All,

This is my first post. My best friend who is a avid BP member suggested to reach out here for help. So here it goes....

I bought first single family home (2000sqft) 2 yrs ago in Cedar Park, TX area during peak of market craze at 5% 30yr fixed for around $540k (spent about 10K more replacing hvac etc) with monthly payment of $3600-$4000 and the market corrected sharply to a point comparable homes are not selling even for 440k with a nice pool in them. In the next 1-2 yrs I'd like to move out to either a bigger place or a new new city (job related relocation etc). What are some ideas should i explore so that I can minimize the financial loss in this situation especially given I cannot refinance even if the rates were 0% as my property value won't appraise. Looking back I made some clear very expensive rookies mistakes and learnt them the hard way. I'd really appreciate your inputs.

Some relevant info that may help

- I'm expecting a size able bonus next yr from my stock vests (~$500k)

- the house needs flooring to be replace since the previous owners put cheap laminate stickers that are coming off and counter tops and cabinet repaints.

- homes are not renting quickly in my areas and even if they rent its below $2k.

- there is a airbnb in my street which seem to have good occupancy

Thanks in advance for all your suggestions. Pls ask me if you need more information to help with better suggestion. !!

take your bonus, pay down the home and sell it. not much creativity that can be had. if you try and short sell it the banks could still come back after you and it will crush your credit. chalk it up to a very expensive lesson learned - was it driven by FOMO of feeling like you needed to invest because everyone else was making money?

Thank you!

The decision to buy the first home wasn’t from FOMO. But, when ppl were over bidding and stuff we should have said No and waited. Rather we rushed anticipating interest rates would go up soon back then.

Podcast Guest on Show #222

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

1y

Quote from @Chander Sri:

Quote from @Chris Seveney:

Quote from @Chander Sri:

Hi All,

This is my first post. My best friend who is a avid BP member suggested to reach out here for help. So here it goes....

I bought first single family home (2000sqft) 2 yrs ago in Cedar Park, TX area during peak of market craze at 5% 30yr fixed for around $540k (spent about 10K more replacing hvac etc) with monthly payment of $3600-$4000 and the market corrected sharply to a point comparable homes are not selling even for 440k with a nice pool in them. In the next 1-2 yrs I'd like to move out to either a bigger place or a new new city (job related relocation etc). What are some ideas should i explore so that I can minimize the financial loss in this situation especially given I cannot refinance even if the rates were 0% as my property value won't appraise. Looking back I made some clear very expensive rookies mistakes and learnt them the hard way. I'd really appreciate your inputs.

Some relevant info that may help

- I'm expecting a size able bonus next yr from my stock vests (~$500k)

- the house needs flooring to be replace since the previous owners put cheap laminate stickers that are coming off and counter tops and cabinet repaints.

- homes are not renting quickly in my areas and even if they rent its below $2k.

- there is a airbnb in my street which seem to have good occupancy

Thanks in advance for all your suggestions. Pls ask me if you need more information to help with better suggestion. !!

take your bonus, pay down the home and sell it. not much creativity that can be had. if you try and short sell it the banks could still come back after you and it will crush your credit. chalk it up to a very expensive lesson learned - was it driven by FOMO of feeling like you needed to invest because everyone else was making money?

Thank you!

The decision to buy the first home wasn’t from FOMO. But, when ppl were over bidding and stuff we should have said No and waited. Rather we rushed anticipating interest rates would go up soon back then.

One other thought is fully furnished mid term rentals.. these have worked very good for us in Vegas we get a double or better rent premium on ours.. much less work than STR and you dont have to worry about ordinances or HOA restricting them.. Our tenants have been insurance burn outs ( their house burnt down insurance is paying the rent) to those building Custom homes that will take 12 to 18 months.. JUST the perfect tenant.. all 700 plus fico and never miss a payment and the only damage done in 4 years now was an ottoman that had something hot put on it and the tenant replaced it..

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Chander Sri

OP

Member since 2024 · 4 posts · 2 votes

1y

Quote from @Josh Young:

@Chander Sri

Austin (and surrounding area) is in a correction, but has good long term fundamentals, so keeping it as a rental could end up making you a lot of money, it just might take a few(5-7) years. From what you said it sounds like a short term rental could be a good move, and the tax benefits could be significant if you look into the short term rental tax loophole. I personally like long term rentals, but it sounds like the numbers don't make sense and if you cant afford to or can't justify covering that much negative cash flow then another strategy is renting by the room, that works well if you have or can convert to at least 4 or 5 bedrooms.

I know you are probably bummed about this and feel like you made a mistake, but if you can figure out how to hold this property and buy more properties and hold them then you will end up making significantly more money in the long run; you don't build a real estate portfolio by selling.

Hey Josh, appreciate your advise! I'm inclined in this direction as well.

Chander Sri

OP

Member since 2024 · 4 posts · 2 votes

1y

Quote from @Jay Hinrichs:

Quote from @Chander Sri:

Quote from @Chris Seveney:

Quote from @Chander Sri:

Hi All,

This is my first post. My best friend who is a avid BP member suggested to reach out here for help. So here it goes....

I bought first single family home (2000sqft) 2 yrs ago in Cedar Park, TX area during peak of market craze at 5% 30yr fixed for around $540k (spent about 10K more replacing hvac etc) with monthly payment of $3600-$4000 and the market corrected sharply to a point comparable homes are not selling even for 440k with a nice pool in them. In the next 1-2 yrs I'd like to move out to either a bigger place or a new new city (job related relocation etc). What are some ideas should i explore so that I can minimize the financial loss in this situation especially given I cannot refinance even if the rates were 0% as my property value won't appraise. Looking back I made some clear very expensive rookies mistakes and learnt them the hard way. I'd really appreciate your inputs.

Some relevant info that may help

- I'm expecting a size able bonus next yr from my stock vests (~$500k)

- the house needs flooring to be replace since the previous owners put cheap laminate stickers that are coming off and counter tops and cabinet repaints.

- homes are not renting quickly in my areas and even if they rent its below $2k.

- there is a airbnb in my street which seem to have good occupancy

Thanks in advance for all your suggestions. Pls ask me if you need more information to help with better suggestion. !!

take your bonus, pay down the home and sell it. not much creativity that can be had. if you try and short sell it the banks could still come back after you and it will crush your credit. chalk it up to a very expensive lesson learned - was it driven by FOMO of feeling like you needed to invest because everyone else was making money?

Thank you!

The decision to buy the first home wasn’t from FOMO. But, when ppl were over bidding and stuff we should have said No and waited. Rather we rushed anticipating interest rates would go up soon back then.

One other thought is fully furnished mid term rentals.. these have worked very good for us in Vegas we get a double or better rent premium on ours.. much less work than STR and you dont have to worry about ordinances or HOA restricting them.. Our tenants have been insurance burn outs ( their house burnt down insurance is paying the rent) to those building Custom homes that will take 12 to 18 months.. JUST the perfect tenant.. all 700 plus fico and never miss a payment and the only damage done in 4 years now was an ottoman that had something hot put on it and the tenant replaced it..

Thanks for your reply Jay!

How is your occupancy rate overall for mid term? How do ppl typically search for mid term rentals. I'll investigate how well this can be applied to Austin market. thanks again!

Podcast Guest on Show #222

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

1y

Quote from @Chander Sri:

Quote from @Jay Hinrichs:

Quote from @Chander Sri:

Quote from @Chris Seveney:

Quote from @Chander Sri:

Hi All,

This is my first post. My best friend who is a avid BP member suggested to reach out here for help. So here it goes....

I bought first single family home (2000sqft) 2 yrs ago in Cedar Park, TX area during peak of market craze at 5% 30yr fixed for around $540k (spent about 10K more replacing hvac etc) with monthly payment of $3600-$4000 and the market corrected sharply to a point comparable homes are not selling even for 440k with a nice pool in them. In the next 1-2 yrs I'd like to move out to either a bigger place or a new new city (job related relocation etc). What are some ideas should i explore so that I can minimize the financial loss in this situation especially given I cannot refinance even if the rates were 0% as my property value won't appraise. Looking back I made some clear very expensive rookies mistakes and learnt them the hard way. I'd really appreciate your inputs.

Some relevant info that may help

- I'm expecting a size able bonus next yr from my stock vests (~$500k)

- the house needs flooring to be replace since the previous owners put cheap laminate stickers that are coming off and counter tops and cabinet repaints.

- homes are not renting quickly in my areas and even if they rent its below $2k.

- there is a airbnb in my street which seem to have good occupancy

Thanks in advance for all your suggestions. Pls ask me if you need more information to help with better suggestion. !!

take your bonus, pay down the home and sell it. not much creativity that can be had. if you try and short sell it the banks could still come back after you and it will crush your credit. chalk it up to a very expensive lesson learned - was it driven by FOMO of feeling like you needed to invest because everyone else was making money?

Thank you!

The decision to buy the first home wasn’t from FOMO. But, when ppl were over bidding and stuff we should have said No and waited. Rather we rushed anticipating interest rates would go up soon back then.

One other thought is fully furnished mid term rentals.. these have worked very good for us in Vegas we get a double or better rent premium on ours.. much less work than STR and you dont have to worry about ordinances or HOA restricting them.. Our tenants have been insurance burn outs ( their house burnt down insurance is paying the rent) to those building Custom homes that will take 12 to 18 months.. JUST the perfect tenant.. all 700 plus fico and never miss a payment and the only damage done in 4 years now was an ottoman that had something hot put on it and the tenant replaced it..

Thanks for your reply Jay!

How is your occupancy rate overall for mid term? How do ppl typically search for mid term rentals. I'll investigate how well this can be applied to Austin market. thanks again!

rarely vacant for more than 1 month a year..

JLH Capital Partners51 Review

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

1y

@Christopher Robert Noland

Please stop with the ChatGPT responses

7e investments53 Reviews

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

1y

Quote from @Chris Seveney:

@Christopher Robert Noland

Please stop with the ChatGPT responses

I was wondering about that. Lol.
One of his other posts somebody said that it was the best answer they’ve ever received on Bigger Pockets. Lol.

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

1y

Quote from @Chander Sri:

Hi All,

This is my first post. My best friend who is a avid BP member suggested to reach out here for help. So here it goes....

I bought first single family home (2000sqft) 2 yrs ago in Cedar Park, TX area during peak of market craze at 5% 30yr fixed for around $540k (spent about 10K more replacing hvac etc) with monthly payment of $3600-$4000 and the market corrected sharply to a point comparable homes are not selling even for 440k with a nice pool in them. In the next 1-2 yrs I'd like to move out to either a bigger place or a new new city (job related relocation etc). What are some ideas should i explore so that I can minimize the financial loss in this situation especially given I cannot refinance even if the rates were 0% as my property value won't appraise. Looking back I made some clear very expensive rookies mistakes and learnt them the hard way. I'd really appreciate your inputs.

Some relevant info that may help

- I'm expecting a size able bonus next yr from my stock vests (~$500k)

- the house needs flooring to be replace since the previous owners put cheap laminate stickers that are coming off and counter tops and cabinet repaints.

- homes are not renting quickly in my areas and even if they rent its below $2k.

- there is a airbnb in my street which seem to have good occupancy

Thanks in advance for all your suggestions. Pls ask me if you need more information to help with better suggestion. !!

What is the timeframe you are looking at?

Aubrey Durham

Real Estate Agent · Austin, TX · Member since 2024 · 30 posts · 8 votes

1y

I think it comes down to what your goal is. Cash flow or appreciation. I have found in the Austin area, appreciation is your best option since property values are so high that rent can put you in the red month to month, even on really great deals. That's why a lot of the recommendations here are to hold because the appreciation in that home is where you will make your money, but it does take time.

It sounds like what you were looking for is cash flow in which case there are other areas in north/south Austin I would recommend. In fact, getting a home outside the city that cash flows can help you minimize financial loss on your Austin property! :) You got this!!

Jackie Nyambura Everett

Real Estate Consultant · Austin, TX · Member since 2023 · 30 posts · 8 votes

1y

You are definitely not alone in such a situation. Focus on what is a critical goal to you. If it's minimizing financial loss holding onto the property to rent out maybe a better long term option (5-8 years) as the home will appreciate.

I would recommend the mid term rentals option as well if you want to make some decent money sooner and not wait so long.

A foreclosure takes 7 years to go away too.

I have a contact that specializes in mid term rentals so feel free to connect offline if you need that expertise.

short term rentals option may work too.

good luck and wish you all the best on getting a decent outcome for such a difficult situation.

Jackie

Lucas McQuinn

Member since 2021 · 11 posts · 2 votes

1y

Here's a few options I would consider if I were in this situation. The right choice not only depends on the property, but the investor as well. Hope it's helpful!

Short-Term Rental (STR) Options: If an Airbnb on your street is performing well, consider converting your property into a short-term rental. This route can help generate more cash flow than a traditional rental and offset holding costs, even if occupancy rates fluctuate.
Rehab: Use part of your bonus to address those problem areas for a BRRR approach. You may be surprised how quickly the MLS value can improve with improved curb appeal alone as well, so consider the landscaping if you want a quicker way out of the property.
Lease-to-Own: Could attract buyers who can’t buy outright now but want to. This could cover your mortgage and let you sell when the market is stronger.

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Wale LawalBusiness Member

Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes

1y

@Chander Sri

To minimize financial loss and achieve goals, consider selling now or holding and waiting. Selling now may result in a $100k loss, but holding for 1-2 years can help recoup. Consider Airbnb or short-term rental options. Use your bonus strategically by renovating, investing in a sinking fund, or paying down the mortgage. Consider leasing with an option to buy, turning the property into a corporate rental, and refinancing later.

Good luck!

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