I bought a rehab property that I and a friend are currently rehabing in Hurst, Texas (dfw area). I am trying to figure or become more certain on whether I should rent or sale this property. I bought it for 65k the hard money lender is giving me 10k to fix it up making the total loan amount 75k. other propertys similiar to this one sale for 109k and rents are around 1250$… The idea I have been contemplating is to refiniance with cash out and use half of that to reinvest in another rehab and then continue to recieve some income from the previous property. The house was built in 1959 and I have replaced the air conditionar and furnace but the windows still need to be replaced which will be some money to say the least. what i mean is all these factors weigh in differently with the different back door sanerious ie. rent or sale… if i sale i have to pay capitol gains tax but if i rent and refiniance i do not… this is just one of several verying factors on this dicision. Any insight or wisdom would be greatly appreciated…
Joe,
Learn from my mistake of finding a great deal, having four different plans to make money from it and end up only making about $3K because I was indecisive. Sorry about the run on sentence but it on par when referring to this property. I would recommend that if your not capitalized right now (have money to cover A/C units breaking, or long vacancies), then I would recommend selling. You will have to deal with capital gains, but it is better than having NO GAINS! :hammer I now decide what I’m going to do witha property before I get it and it has really helped my investing. Best of luck.
Win-Win Investing to you, Shawn
Hey Shawn,
Actually I would have capital for repairs and such from the refinance. I can get about 10k from the refinance. I was going to use that to put into another rehab and also keep for repairs on the rent house in Hurst. But it still would be close considering 10k would have to be spread out pretty thin to rehab a property and keep for repairs on rental. if that makes any sense…
Joe :F
Joe,
I t sounds like you already know what you should do with this one. You could make it work, but why stress over an unexpected repair that might pop up. Instead flip it, and continue to find other deals like this one. Do a few flips, set aside some cash reserve, then start holding. This is now my model, and feel it’s the smart thing to do. I tried it the other way and it lead to a $15k profit to be about $2K. Learn from my mistakes, I sure have! :banghead
Best of luck, Shawn
I would suggest that you give it a shot on renting it as it is a long term investment and you can use the rental fee to mobilized other investment to make it more growing.
I agree that you’ve already made up your mind. I think you should follow your instinct on this.
I would rent it though. Payment would be $700 or so, and cash flow 550. I’ll take that. Don’t forget that selling means capital gains and RE commission.