Deciding whether to rent or sell
melle_sacto
5 years ago
last modified: 5 years ago
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melle_sacto
5 years agoRelated Discussions
Deciding whether to reupholster or replace 14 year old sofa
Comments (2)The fabric has more to do with the costs of a sofa when comparing reupholstering verses buying a new from a retail location. Unless the seat cushions are latex foam, 15 years is about all your get out of a HR foam or spring cushion....See MoreOpinion: Should We Sell our Home or Just Rent it Out for a Year?
Comments (44)Hey, all. I thought I would give you an update. We have had one "low ball" offer ~$675,000 since reducing our house price to $749,000. We couldn't get that low so they offered on a higher priced home that had a pool (they really wanted a pool, so I think they preferred our home, but were trying to get us down, so that they could put in a pool). However, I think things are really picking up in the neighborhood. Four high end homes have gone under contract (2 at $799, $699 and $829) in the last couple of weeks, so I am no longer worried about comps. We are going to continue through May with it just "for sale" and then we'll offer it to rent, as well, beginning in June. I am at peace with either option, as I am just excited for us to get on with our lives together in Florida. I appreciate everyone's help, support, and positive energy....See MoreSell or rent in Hawaii
Comments (11)Thanks - the reason I wrote was to get objective perspective - we are way to emotional on this. FYI - I didn't realize I would be asked to justify past decisions - Don't want to sound ddefensive - but here goes. I was transferred to Hawaii for my job, we werent sure if we would like it there so refinanced the CA house to use equity as down payment for the Hawaii house. We then rented out the CA house. Always knew that we couldn't afford both over the long haul - but got 5 year fixed IOs on both with great rates to buy us time to figure out where we wanted to be. We still have three years left (not two). The renovating was about me thinking I was keeping the house. (however with the market shift - selling would have been a bear at that price point without having the house in good shape). Job picture changed - I left my company to come back to CA and move into my CA house. The emotion comes in with really believing that over the long haul - this house / location will really appreciate big and we will probably never have the same opportunity again. (not to mention I love the house and living in Hawaii). In addition the IO loan won't put us underwater for three more years - until then we will be positive. I wasn't betting on the rental market, really just figuring out where we want to live. Now we are struggling with "letting go". I never went into this with an "astute investor" mentality (or I wouldn't have two expensive houses - we would be at the other end of the market for rentals). In addition, I have ready much about the economy - With the current issue with Jumbos - I am concerned that this may not be the moment to put this house on the market. I feel certain that the Jumbo market will open back up eventually - but the next six months or so may cause more pain. Thanks for helping me take the emotion out...See MoreSell or rent?
Comments (25)Here comes another argument... First, there are some very good reasons to own rental property as an investment but they may not be the things you are thinking. Some of the reasons that come to mind are (this is not an exhaustive list, others will have different advice and experiences, this one is mine): Rental property takes advantage of leverage better than most other investments. You can finance 80% of a rental investment which you can't do with a stock market investment. With $20,000 you can get a $100,000 capital assets with a 3% interest rate right now, that is really pretty good. Rental property lets you get a second job working for yourself. Rental property makes money the same way a job does, it lets you convert your time, effort and know-how into revenue. It is important to remember that rental property is a second job, and just like any job some people are naturally good at it, others are naturally bad at it, and just like other jobs experience matters. When you start you are going to make mistakes, as you learn you will make less mistakes, be sure that you are financially capable of absorbing those mistakes. It is an incredibly valuable experience. I believe (my opinion here) that people who are responsible rental property owners develop better spending and investing habits as a whole. I personally think it is hard not to, and prize it as one of my most valuable life lessons. However, there are some things that are also bad about it. Rental property is a job. It requires a lot more attention than traditional investing. It is not a good choice on a shoestring budget. A poor rental property owner is soon to be a very poor ex rental property owner. Houses require upkeep, houses you own and don't live in require more upkeep, houses you own and someone else lives in require even more upkeep...Upkeep is expensive. Bad houses can make great rentals, and great houses can make bad rentals. Renting is about attracting the right tenant for your price point. A lovely inexpensive home can easily turn into a not so lovely cheap home. The best tenants are typically people who can or soon will be able to afford homes but aren't buying for some reason. For less expensive rental homes they are pretty hard to find. Finally, some of the things you are saying really make me think that it isn't for you. It is not an amazing retirement investment. Assuming you have $20,000 equity in the home, taking that same $20k at your age and investing in a broad market mutual fund has averaged about $320,000 at age 67. Rental property can become an amazing retirement investment when you do smart things with the income. In and of itself, property is a rather lousy investment (here comes the argument). To clarify this, buying property in hopes that the appreciation will be an amazing investment hasn't worked very many places (there are times it has in California but that is the exception). Edit: A great thought experiment for you: First, think of the position you will be in if you buy another house without selling this one. Next, think of the position you will be in if you sold this house and bought another one. Now, if you didn't own any house at all which option would you pick? This is a way to remove the sunk cost fallacy from your decision making....See Moregyr_falcon
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