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Should I sell my house?

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Should I sell my house?  Reply with quote  

I have a house in Orlando Florida that I bought in 2009 that was a foreclosure property for 300K. The previous owner bought it for $620K! My 1st mortgage balance is 280K. My 2nd mortgage balance is 36K. I remodeled the entire kitchen which probably cost me 35K. Other remodeling expenses of about $15,000.

My neighbor just sold (September) his house that has the same floor plan and layout, different facade for $550,000! He bought his for 400K in 2006 . Honestly i dont know how he sold it for so much. His interior details dont match my details. So after learning of this i began to weigh the option of selling too.

I dont live in it anymore because I lost my job in 2011 and was out of work for a year for the first time in my life and then landed another job in Houston Texas.

I currently have the house on the rental market but am tempted to sell it considering how hot the market is in my area.

My credit currently sucks (500 fico) due to my job lost from 2012 so i cant buy up to another house.

So my question is should I sell my house and cash out and put my money into some other investment opportunity or just rent it and have the renters payoff the house over time. and then when my credit improves in 3-7 years tap into my equity to buy a house in the city I currently live?

I have a habit of thinking of the worst case scenario which is, what if I loose my new job, have no renter for my house and cant find another job. I have a house in orlando worth money but being desperate to sell I lower the price and am forced to accept a lower offer because Im desperate. So im thinking to just get rid of the house while I can so if the world becomes doom and gloom for me again I am sitting on profit from my house sale. I mean even if I have a renter it does not guarantee they will pay every month so their is risk in renting as well.

Any help is appreciated.
Post Thu Sep 19, 2013 3:34 pm
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While asking "what should I do" isn't something that this forum is designed for -- the advice you receive here isn't professional financial advice and no one in this forum is providing legally qualified advice -- I can point out a few things in your thinking that may help you make a decision.

You are concerned with two things, primarily, the viability of the ownership of the property as an investment and the risk associated with that ownership. In my opinion, your question of risk associated with continuing to own the property is paramount. You own a house that is not geographically close to you and at this point it is not generating any income. If you were to sell, you would realize an immediate return on your investment if you were to get an amount close to what your neighbor got for their house. The other option would be to try to rent it, which has costs associated with it -- especially long distance, and, as you pointed out, there is always the risk that you would have a deadbeat tenant, or that the house could sit vacant for some time and you don't have the money to float this if you were to be without a tenant and without a job at the same time.

Rental properties can be great investments, but the price range you are talking about isn't ideal for a rental, in my opinion. If you want to put up with the headache of being a landlord, don't let the situation of a move/job change force you into it if you have another out. If selling the property would generate a profit, you succeeded in your investment and it is probably time to move on to other things/markets. With the numbers you quoted, you might realize a 150k+ profit out of this and if you really want to be a landlord, properties in houston that would be better rentals can probably be purchased for the same amount.
Post Thu Sep 19, 2013 4:53 pm
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I'm a landlord - I buy small 3bd2ba houses, about 1000 to 1200 sq ft, no frills (no fireplace, no pool, no ganite, etc). That seems to fit the rental market best - young couples w/ small kids are saving for a house, need flexibilty until they get their 'permanent' jobs. So a small home for ~$1000/m fills the need.

Big houses can sometimes be rented to a middle-aged high-income couple that are assigned to a new position for a couple yrs - but that's not common.

Your payment (incl tax, ins, HOA) is over $2500/m. IMO, it is unlikely that you'll find a $2500 renter in an area where, as you know, there aren't many jobs. (If you want to be a landlord, sell the big house and buy a pair of small houses.)

his house that has the same floor plan and layout, different facade for $550,000! He bought his for 400K in 2006 . Honestly i dont know how he sold it for so much. His interior details dont match my details. So after learning of this i began to weigh the option of selling too.

A couple 'urban legends', what a house cost has nothing to do with what it will sell for. And second - the interior details don't do much for an appraisal. When you spend $50,000 for remodeling, that might add $15k or $20k to the value - so a remodel is good if you are going to live there for 25 yrs to enjoy it - but it is a waste of money for a resale.

I would sell it, if you rent it, it could sit for a year with a "For Rent" sign and cost you $30,000 in payments. But I would price it to sell quickly - don't try to get that 'mystery' $550k (did you actually see ths sale price in the county record?). Again if you let it sit on the 'For Sale" market for 6 months that costs $15,000. Better to sell it now, capture that $15,000, and get it working for you elsewhere. Very Happy
Post Thu Sep 19, 2013 5:48 pm
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What I noticed about your thread is that you stated you lost your job, which is never fun, but how long were you out of work and did you have an emergency fund that accounted for the possibility of a job loss? Because if your stating that your FICO score is 500 because you didn't have any money to pay your bills, then sorry to say it but that's being disorganized. Believe me I know what it's like to lose a job, I've been laid off 3 times in my life, but you need to have a back up plan.
If I were you I'd sell the home and pay off all of your bills if you can. Then start saving up a down payment on another home and this time it will be much easier now that you have a job. Stock up an EF fund because you know now that you can lose your job.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Thu Sep 19, 2013 6:37 pm
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Assuming your figures are correct, you could reasonably walk away from the FL house with over $150K in your pocket. That buys a lot of house in Houston, especially if you're willing to live on the far west side. Cy-fair has many neighborhoods where $200K listings (you've got cash, so don't pay full price by a mile) are extremely nice units. Of course, as it is Cy-Fair, and probably in a MUD, you'll likely pay $8K per year or more in taxes, but that's why Houston houses are so cheap. No matter what you buy, you're actually renting from the government.
Post Fri Sep 20, 2013 1:45 am
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The question of "should I sell my house" is always a tough one to answer. Given the current economic downturn, selling up and renting for a few years is a massive help in lifting the burden of monthly loan repayments. On the other hand, if you're comfortable with your financial commitments, waiting a few years might ensure a better sale price.
Post Wed Sep 25, 2013 11:31 am
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