All Forum Posts by: Karan Kanekar

@Karan Kanekar, A lot of folks won't realize that the most attractive areas to live are also the most attractive areas to buy. and your rental pool might be artificially low because everyone wants to buy in that area rather than rent. That could be one reason.

If you find that the rental market wasn't what you anticipated and you choose to sell, you could qualify for a 1031 exchange and defer all of the tax and depreciation recapture if there is any since you have purchased it.

This would allow you to use the tax to reinvest into another investment property and find something in an area with better potential.

If that property was once your primary residence (because of it's location) and you lived in the property for two out of the previous five years, you would also qualify for a 121 exclusion, and that would allow you to take the first $250K ($500K if married) of the gain tax-free.

Karan, nobody had asked yet. What is the goal you’re trying to achieve?  

Its hard to cash flow a house like this in our market unless you have a lot of equity so you mortgage payment is really low.  Cash flow isn’t the only reason to hold rental properties though. (Tax benefits, appreciation, someone else paying your loan)

With your goal in mind, then ask if this property will get you there?   I hope it does.  If it doesn’t then you should sell and find something that will get you to your goal

I think there are a few issues. One is that I only see it on the MLS for 4 days now. So maybe your PM was trying to double end it and not share your listing with the world? You have to think if that is benefiting them or you? What fee are they offering to other brokers to bring you a tenant? While I don't have any stats, I think "self showings" are not beneficial to you. I'd want an agent or PM that is personally going to show the property and make sure lights are turned off, thermostat is not adjusted, and doors are all locked up when people leave. You don't get that with self showings. You also don't get a chance to meet the tenants, address their concerns, encourage them to apply and leave a good lasting impression with them.

You can put it up for rent and sale at the same time and see who comes first.  Unfortunately it appears that you bought at the very peak of the market, so rents and sales prices may not match what you paid.  You probably need to lower rent to be competitive.  I see brand new homes that are in great school districts around you like Frisco and Prosper for $3000-$3500 month.  So while the house is in a great location, it is a bit dated from what I can tell, so your pricing probably needs to match that.  Not many investors do this, but I say every time it is vacant you should put up for sale AND rent.  If you really want to rent, put the rent price competitive so you rent vs sale, and put the sales price up high enough that if someone buys it you are happy with the profit.  If you'd rather sell then rent, do the reverse.  Set the rent high enough you're happy if someone pays you big fat rent.

As an agent that works a fair number of leases I also don't like the alternative showing system.  I prefer it to be on broker bay, but showingtime is ok also.  Let's say I'm showing 5 properties today in West Plano 4 are on Broker Bay, but yours #5 is on some kind of alternative service I've never heard of before, and I have to stop and mess around uploading my ID and trying to figure out how I get access, it just starts everything on the wrong path initially.  This works in your agent's favor as they don't have to pay the fees for the showing services, but it doesn't work great for the agents who will bring you 90% of your great tenants.  I just believe in making things as frictionless as possible.  Start adding friction to the process and I think it costs you money.

I do like that you are allowing pets.  A quick survey in a class one day with PMs said 80% of renters now have pets.  Not sure if that is true or not, but seems legit.  So that will help you I expect.

The other thing I think you should do is think about if you want to be a rental property investor and if you do is this the house you would have targeted to buy and rent.  I'm guessing you bought it to live in and not to rent.  Don't be a forced landlord.  That's never good in my opinion.  If this was your personal residence sell it now so you don't potentially loose your capital gains exemption.  Check with your CPA this year when you file your taxes this year.  You may want to sell, even if that means taking a loss.  It happens and while no one feels great about that, it does happen and good to move on to a different option or investment.

Best wishes and good luck.

You should have some idea of what RoE you’ll be making if you rent vs sell and reinvest. Make sure to account for taxes. If you don’t know these answers don’t sell anything until you do.

If you aren’t getting the applications you want you’re overpriced or under improved. Use the comps in your area to fix that.
I will be making 60-70% ROE if I sell it and for renting losing -4% yearly.

Quote from @Greg Scott:

You've actually got two problems here, not one.

The first is: Why is your house not renting?  Without an address or knowing much about your house, it appears you've priced it near the top of the market.   There are nice-looking 4/2.5s with much lower rent than you in West Plano.  (see screen shots) Most of the homes at $3,000 and above have more bedrooms or baths than yours.  If you want to get it rented fast, drop the asking rent to $2,800. You've already lost one month having it sit vacant, which means you've lost the equivalent of $250 per month on a 12-month lease. At $3,000 you may be waiting a long time for a renter.

The second issue was:  Lease vs Sell.  Honestly, you didn't give enough information.  Was this your primary residence before?  What kind of appreciation have you enjoyed?  There are numerous questions.  However, if you are not ready to be a landlord, you should sell.

 Hello greg, i would say 20% appreciation it was primary residence an year ago. And then i rented for year by room.address is 4104 creekstone drive,plano.

You've actually got two problems here, not one.

The first is: Why is your house not renting?  Without an address or knowing much about your house, it appears you've priced it near the top of the market.   There are nice-looking 4/2.5s with much lower rent than you in West Plano.  (see screen shots) Most of the homes at $3,000 and above have more bedrooms or baths than yours.  If you want to get it rented fast, drop the asking rent to $2,800. You've already lost one month having it sit vacant, which means you've lost the equivalent of $250 per month on a 12-month lease. At $3,000 you may be waiting a long time for a renter.

The second issue was:  Lease vs Sell.  Honestly, you didn't give enough information.  Was this your primary residence before?  What kind of appreciation have you enjoyed?  There are numerous questions.  However, if you are not ready to be a landlord, you should sell.

This is the reason I usually ask for a credit, instead of a repair during escrow. It's very typical for a seller to do the absolute cheapest fix. Of course, that's not helpful to you at this point with this deal.

When you asked the seller to "fix it", what did your contract actually say? Who did the fix, and did you have your inspector reinspect after it was completed? I have never had a client try to get additional repairs done from a seller after the transaction closed, but if I were in your shoes, and I wanted to deal with the hassle, I would consult a real estate attorney. I think practically speaking it may be better for you to just take this as a relatively inexpensive lesson, and move on.