Hi all, I have a flip that ihas been just sitting for sale for three months. Am thinking of renting it the first of January. Have had a lot of lookers just slow season for buying and I am not being very flexible on price. It has new everything and is in a good neighborhood so I know it is not that the house is not in good shape. My realtor says it is just slow all together. I have not seen many sales at all in the town either, so I know she is right. I hate the thought of renting out something I put so much into, but I hate the thought of it sitting empty and paying holding costs also. Has anyone ever rented with no lease on short term basis and had good luck with that? Would appreciate any input. Thanks, Graciez
Graciez,
Houses that have been rehabbed for sale often make very poor rentals. Typically, resale houses are rehabbed to a higher level than would be smart for a rental. Renting for a few months may result in a trashed house that must be rehabbed again before it can be sold. By renting, you could easily be out many times the cost of a few more months holding costs. In a declining market, you probably need to be more aggressive with your pricing if you want to sell the house.
Let’s face it - the market has changed. The days of run-away appreciation are over - probably for at least a decade. There is too much inventory and very low demand. In most areas, it will take years for the inventory to work its way out AND millions of people with gimmick loans will be losing their homes, adding to the inventory problems. The REI fad is over and so is the fad of “flipping”.
Back to the real world of real estate!
Mike
I had a rehab sit for almost a year. I was dead set on getting what I thought I “deserved” for all of my hard work. The reality of it was that I had it priced way too high, the market was slow, and that is a terrible combination. Any deals I have now are to be priced $3,000-$4,000 under comps, and if it sits 3 weeks, dropping another $2,000, and so on, until it sells.
why not lease option your house. just tell your optioners to understand they actually are buying the property in ayear or so. and treat the propertylike they own it so if they trash it you keepthe option fee to make repairs. then see where the market is. make a deal with your agent for their comish. good luck
I would either cut a deal with the next offer or let it sit empty. If you convert to a rental then you need to plan to stay that course for at leats a year (or more). Sticking a tenant in while for sale is only asking for trouble (damage) and make more people un-interested in your property
you can have your agent drop your price 5.00 every week so that brings the property up as a newer listing so agents are always seeing it when they look at mls. Or you can lease option the home and get someone else to pay your mortage. just qualify and treat them like buyers then move to your next deal.
I have been in this situation, so I feel you. This time of year is shelf time for house selling, which I learned the hard way a few holiday seasons ago. I guess your decision depends on many things we are not privy to in your post. How much equity you have, what market seg. the house targets (mid class, high end, etc.), what marketing efforts have already been tried, and so forth.
This time of year, I put the marketing machine in overdrive to unload a res. property. Flyers on windshield, favorable no money down financing, cash back incentives, loads of directioon signs to the property stating for sale no money down or something that grabs attention.
I personally would not lease the place without an option. I always pull credit (my mortgage broker actually) on lease option applications to see what the odds are of getting the tenant buyer financed. If it looks good, forget the lease and go to the closing table instead.
good luck,
Lance
realvestors
Respectfully, I say, “Nonsense!”
When buying properties to flip, you should be allowing for the fact that to sell it retail (and I mean to a real retail buyer, not some wacky “for a hamburger today, I will gladly pay you Tuesday” lease-option tenant), you will have to price it competitively.
There are always buyers for dollars when you sell them for 90-95 cents, and when you buy your dollars for 70-80 cents, you can still make money.
I agree “flips” are not what they used to be unless you sell them right. Owner finance is the way to go to sell fast but then you have your money tied up. You could always refi to pull the cash out and then sell at least you will have some cahs to hold you over but then you are entering a dangerous area. In the area I invest in houses or “income properties” sell very fast because they are low priced and have a good positive cash flow. I get quite a few good deals that I have to pass up. For instance the lat property I had to pass on was a 2 unit for 30k no work needed just clean up and put tenants in and could have turned around and sold it for 50k, if I sold it for 40k it would have probably sold in a day. I guess it depends on the area you are in. California is way too dangerous to be playing the flipping game unless you got money to throw away.
Find out the average days on the market and sold price range for houses like yours in your neighborhood before you panic. If you are either priced too high or on the market too long, then lower the asking price. In general houses don’t sell for more than the going rate and at the going rate they sell for the going days on the market. If you are below on price and long on days on the market, then you didn’t rehab to a high enough standard.
There’s the problem. Sometimes a fast nickel is better than a slow dime.
Thanks for all the input! I am thinking about lowering the price for the second time. Purchased for $34,000 sold an extra lot off of it for $6000, and rehabbed property so I have about $56K in the deal and put it on the market for $82K with a realtor who gave me comps. in that area. Now a few weeks ago dropped the price to $79,900 and thinking about dropping it to $77K. Thanks again for your input. I agree, I don’t want to have to rehab it again!!!Graciez
Hell drop it even to $70 and walk with $14k before the market drops outpace your price drops and you’re left holding the bag.
I tend to agree with Rich. I don’t see how a $2k drop is going to generate any more interest. Unfortunately, over the last several weeks, you have been in real estate dead zone. I go down to lower 70’s and try to get someone to make an offer.
A drop of a few dollars does make since at times. When people search for a property they set search parameters…usually price. They may search for houses between $75k and $65k. If your house is priced at $76k that person would never even know that your house was on the market. While a price of $74 will show it to them. So if you are going to drop the price drop it past a natural search point.
I agree with your logic but I don’t think people search in a such a narrow band. Also, she had already dropped into the 70’s; going down to 77 is going to make a different in a search.
However, the seller/owner stated she had a fair amount of traffic but seem to indicate no offers. Thus, IMHO, she needs to position herself for a potential buyer to think, “gee, this looks like a deal” to get people to engage. Also, if someone looked at the place and then sees lit dropped in price a significant amount, it might spark new interest.
With that said, there is no right answer; just speculation until the right buyer shows up…
Thanks all for your opinions, its a tough call, but I do want to sell it so I see the wisdom of getting it priced right. Thanks again, Graciez
I have to agree that small price drops don’t attract much attention…I just recieved news that one of my many offers has been accepted…It was a house (duplex)rehabbed for a flip that was sitting empty…I used the formula learned here and offered %70 ARV and my offer has been accepted with insane terms to my benefit…IMO many people are looking for bargains and most people I know with money are holding it tight rather than be caught in a downturn that we all know is long long overdue…The fed minutes came out yesterday and immediately sent wall st into a tailspin because inflation is a bigger concern than previosly thought…I have to agree with propertymanager that the flip market is hitting tougher times and if you can unload it and still make some money do it…I for one am very happy that RE is heading down the mountain and I’m thoroughly looking forward to taking advantage when the blood hits the streets…