The Real Estate Market is dead, should I rent my house and take a loss until the market rebounds?
I have a house a block and half to the beach in NW Florida. Remodeled 3/2 w/ loft office, pool, large lot, etc. No leads after 2 months. I assume the market will come back in a year or two and would hate to basically give away such a great house. On the other hand, I’m worried about rentors damaging the house. Also I will not be able to get enough monthly to cover the mortagage payment, I estimate a $300-$500 a month loss.
Passive Income
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June 25th, 2010 at 8:12 pm
Selling a home is never easy, so expecting something after just 2 months is premature.
I do not recommend renting this property. Having a pool requires maintenance and upkeep. Even if you offered to share the cost of upkeep and water, you still risk damage to the filter system and yard maintenance. You should have an inspector go through the property so you have an idea of things that may come up in a negotiation.
Market this house – get a realtor that will promote your property and get your home listed on the web, craiglist, newspapers, etc..
Hang in there.
June 27th, 2010 at 12:03 pm
the market will eventually swing the other way. i’d keep it if you can.
June 30th, 2010 at 5:59 pm
I would say it depends on how long you can hold on to the property without losing it. To be honest, I do not expect the market to come back anytime soon. Interest rates are what fueled this housing market! For your future home purchases, follow this rule – make your money when you buy. What I mean by this is buy houses 70-80% below market (this is easily done in a buyers market) and sell 20-30% above market (sellers market) and you will not go wrong! So I would say if you can, hold on to the house.
July 2nd, 2010 at 12:08 pm
rent it as vacation rental go to VRBO.COM they can get you 800 to 1000 a week as vacation property !!I know I use them !!!
July 3rd, 2010 at 3:27 pm
Try offering owner carried financing, You can sell the mortgage afterwards. You can usually get a higher price for the house and a higher interest rate that way, and more buyers… You have to be carefull to do a through credit and background check too.
Also, you are getting a 100% loss on your mortgage payments now, so that 300-500 per month loss if you rent, is a smaller loss than the 100% loss. You can charge more for rent on a lease with option to buy, but again, through background and credit check.
July 6th, 2010 at 5:03 pm
Or You can look at a lease-option, rent to families or people who cannot qualify for a bank loan but have the income to pay your desired rent (which can be above market) and give them the option to buy end the end of the agreed term, say 3 years.
Good part for a family or couple looking to buy is if they pay rent on time and build up a good rating, they may qualify for a loan or save up more for a deposit….
You can find out more here–to-own-property.blogspot.com
But always surround yourself with a good lawyer and accountant who specialise in property.
Good luck
July 7th, 2010 at 7:07 am
Not sure if this would help. Usually, a housing market correction last for years. It is unlikely things will brighten up in a few months, afterall, this bubble took 5 years for form.
It might be better to give some discount so you unload the house quickly and can use the gain of the home to make money elsewhere quickly. At the same time, you will save money by not paying mortgage for the next 5 months.
For example, if mortgage is $2500/mo. and you have $300,000 gain sitting in the house, by selling it now rather than 5 months later will save you $12500. It will also earn you as much as $7000 from interests (Assuming CD are paying 5.5% or higher).
Total financial benefit for selling early would be $20,000. I would give buyer some discount just because of that.
Finally, keeping a house in selling condition is a lot of work. If your realtor does staging, it costs extra to rent furnitures. If you are living in the unit, it takes extra effort to keep it clean. So, sell it fast!
July 9th, 2010 at 7:40 pm
Homes are always selling and the best home for the best price is always getting showings. If it’s that dead for you after 2 months then your priced far enough over your competition that it doesn’t even look good on paper. If you can sell it now and make a profit you should. Take your money elsewhere and get a better return on investment you should do it. Don’t just stick you head in the sand.
Remember when the stock market started going down and everyone held out thinking it was about to go back up? They could of sold and got into a better equity like gold and done just fine. Now it did come back some..but that’s a lot of lost time that money could of been working for their owners.
You likely calculated your price based off area appreciation during the time you held it and locked in on how much you want to make. That isn’t how you calculate value. You have to price it at current market conditions to get a sale.
Now, if your willing to hold your home for 2 years at a $500 dollar month loss, maybe you drop your house that $12,000 dollars before your destroy your house with renters. On the other hand you could wait speculatively hoping the market comes back (it will eventually) or that rents will go up (they are)
Personally, I believe you’d be better off taking what money you made and moving it into a better investment that will actually make you a return over the next couple years.