All Forum Posts by: Adam L.
Adam L. has started 28 posts and replied 82 times.
Post: Selling Primary. How to evaluate if it was a smart investment?
- Posts 82
- Votes 16
So I'm selling my homestead after nearly 4 years. Curious if anyone has a calculator or tool to help show if it was a good investment choice, rather than just renting and investing the difference. Factoring in total things like PITI, repairs & maintenance, honey-do items, fees, utilities, all that jazz, vs just renting a house and investing in Vanguard accounts.
Any help?
Post: Anyone ever to mailbox letters asking owner if they would sell?
- Posts 82
- Votes 16
So I just moved to a new town and have found a few desirable neighborhoods I'd love to live in for my primary residence. The problem is that homes NEVER turn over and it seems there's a lot of 'off-market' or pocket deals that never hit the MLS.
Curious, has anyone just blasted a neighborhood w/ letters asking if the owner would sell their house? Maybe write a nice letter describing my family and desire? Any success? Any services I could use to mail letters directly to a targeted neighborhood?
Post: Revisit: Corporate Relo: keep or sell?
- Posts 82
- Votes 16
Revisiting this topic from this post 2 weeks ago after meeting w/ the Relo Realtors and gathering more information.
Wondering if anyone on this board could help me with calculating the value of the total relo benefit, the opportunity cost, vs keeping the house to rent.
Background:
- premium corporate relocation package, moving away from a nice neighborhood in Austin, TX.
- home backs up to a golf course, 4BR home, large lot, 10-rated school districts, great community (the kind where you know all your neighbors and hang out on driveways for happy hour, before COVID)
- Purchased 2016 for $542k. Financed $417k. PITI = $3000/mo.
- Current appraisal and estimated list price is $750k (wtf!), coming from 2 different realtors provided by Relo company.
- If I sell my home, relo company will reimburse me the 6% commission and pay closing costs, and 'tax up' the benefit (meaning they pay the taxes on the value of the benefit). I have upto 12 months to sell home.
- rental rates are uncertain and hard to find comps. I think I could rent for sure @ $3000/mo but would need to find a higher rate just to break even when factoring everything in.
- I do not *need* to sell this house to purchase my next house, but it certainly would make things easier
So, wow. big benefit offer. How do I value the opportunity cost of not selling the house and taking money off the table VS the equity gain of holding the property? I'm considering holding it as a rental for 2 reasons.
- Austin is a special market, specifically, this sub-market is even more special. House are appreciating way more than 6%. This seems to be a great investment for the equity play.
- The emotional aspect. If I ever do move back to Austin, I'm afraid I'll be priced out of this amazing neighborhood. Families often choose to add on a 2nd floor rather than move and find a bigger house because they want to stay in this neighborhood.
Anyone able to help me do the math or share a calculator that factors in the opportunity cost of taking the cashout ($364k equity, $45k realtor commission, closing costs, CapGains exclusion) vs holding for a rental (zero or negative cash flow but strong equity appreciation).
Post: Corporate Relocation...Do I keep my house to rent or sell it?
- Posts 82
- Votes 16
One thing I'm curious about and unsure of how it works, is how to leverage and utilize equity of my current house to then purchase a new house in Boise.
How do I do this without needing $100k down payment?
Post: Corporate Relocation...Do I keep my house to rent or sell it?
- Posts 82
- Votes 16
Originally posted by @Trevor Rutherford:
In that area of town you might get a bidding war started. I would sell.
definitely possible. The house across the street is an interesting story. Grandma died, hadn't fixed up the house in 25 years, the kids sat on the house for more than 1 year. My parents even tried buying it from them, but they didn't budge. Finally, the kids gave up and sold to a flipper for $450ish....the flipper then did their work and flipped it for ~$750ish....and now less than 1 year later, the family that bought it is moving out of state and just sold it (unlisted) for $850+...and its smaller than our house.
Post: Corporate Relocation...Do I keep my house to rent or sell it?
- Posts 82
- Votes 16
Originally posted by @Sara Liskey:
@Adam L Sell it! If the rent is 3k on a 545k value, that is a .55 rent to value ratio. You can sell and invest in places with a rent to value ratio of .8-1%, with much lower taxes, that will cash flow nicely.
I agree here too. Its definitely not a good 'rental' or 'investment' property in terms of cash flow....but there's the appreciation and equity and emotional factors to consider. It's a tough call.
Post: Corporate Relocation...Do I keep my house to rent or sell it?
- Posts 82
- Votes 16
Originally posted by @Account Closed:
@Adam L Can you buy in Boise without selling in Austin? If you can thats what I would do. You may be cash flow neutral but you are paying down the mortgage. Plus gaining appreciation. Austin A class neighborhood will likely hold its value well. And you should be able to get good tenants that preserve the property. Look at the long term picture.
This is what I'm thinking too. We've put out feelers to see about renters and we've found several people like:
- - "we're adding a 2nd story to our home [in the neighborhood] and need a place to stay for 8-12 mos
- - "my sister wants to spend the summer away from SF and is looking for a furnished house nearby"
- - "I'm going through a divorce and looking for a lease that allows me to stay nearby to the kids"
Post: Corporate Relocation...Do I keep my house to rent or sell it?
- Posts 82
- Votes 16
Originally posted by @Steven Ko:
@Adam L it seems like most people are forgetting about appreciation. Your home gained approximately 100k in 4 years. I don’t know if that’s something cashflow would have gotten you. David Greene uses this example all the time and more recently so on recent podcasts.
I believe Austin is one of the hottest markets.
Can you afford to pay for the Austin residence?
My parents bought their house back in 2002 in Sunnyvale, CA (next to San Jose/Bay Area) for 500k, now it’s listed on Zillow for 1.7mil and houses go for over asking here. They can comfortably retire now. What made it go up like crazy was the development of the new Apple HQ, their house is 1 block away. That news made my Parents property double. Not bragging but my belief is Jobs = rising prices. So if there really is development (and I know Austin is like “HQ2” for Apple) I like the idea of holding for the long run. IF YOU CAN ADDORD IT. No need to struggle.
You found your way to BP so I would hope your interested in becoming an investor. If you hold onto it, you can 1031 later. It might get messy timing wise with your relocation bonus but something for you to weigh.
I recently moved across the country from CA > PA and not that I don’t like my neighborhood, but my fiancé would have wanted something different. Do you know the exact neighborhood where you’d want to relocate too? Have you visited before? These are somethings renting can figure out for you. Just some food for thought :)
Great points.
So is $100k over 4 years good for appreciation on a SFH? How does this stack up? It seems my neighborhood is definitely not a 'rental' neighborhood.
Yes, I believe we could afford down payment on new house in Boise without selling here in Austin: significant cash stockpile plus my access to various sources of credit (insurance vehicles, 401k/IRA loans, HELOC, etc).
Can we direct message more about 1031?
Yes, it seems that there will be development here over next 10 years. Apple just did a huge deal to place a new campus less than 2 miles from here, as well as a shiny new outdoor mall/living complex nearby too.
Post: Corporate Relocation...Do I keep my house to rent or sell it?
- Posts 82
- Votes 16
Originally posted by @Taylor L.:
When you're not there, how will you manage it?
It won't cash flow (rent = mortgage payment, no money left over for repairs & management), so it's going to cost you money every month to own this property. Is that a headache you're ready for?
We are headed into a recession which may or may not impact real estate values. If anything, people are going to be looking for more affordable housing over the next couple years. Plus, the first $250k of gains or $500k of gains are tax exempt (restrictions apply, verify this for yourself) but only if you lived in the property for 2 of the last 5 years. That's an awesome benefit as well.
If you take the gain and invest it elsewhere, will you earn a better return than the appreciation on the house, factoring your sweet benefit package, minus a year's holding costs? Probably. We know for a fact it'll lose money every month based on the numbers you provided (unless the rent is massively underestimated). We do not know if the value will keep going up.
We also know that unemployment is at unprecedented levels, mortgage delinquencies are way up, and small businesses are closing left and right. The conditions are ripe for falling real estate values. Not good if you're hoping the price goes up and are already cash flow negative.
I would sell while the getting's good and start looking for a better home for that money. There are many options for you that will be much less of a hassle than managing a tenant or property manager that loses you money every month.
Congratulations on the awesome job deal, that's fantastic.
thank you for the advice! man, I am a low-information decision maker here, as in I don't make this decision very often and its quite hard to assess.
Post: Corporate Relocation...Do I keep my house to rent or sell it?
- Posts 82
- Votes 16
Originally posted by @Jordan Moorhead:
@Adam L. I don't see how that will cashflow? What's the PITI per month?
All, agreed. I think this will be quite hard to cashflow positive...neutral at best.I'm think I'm more trying to weigh the intangible and emotional values....what if I move back to Austin and now I'm priced out of the neighborhood we love. Rental comps are hard to figure out, there's not much to find and most of the neighborhood is homeowners. I think there is a lot of value and potential to find a long term family rental, as it's in the #1 school district and a strong family/community vibe.