Here’s the picture. We have 2 properties a rental and our primary. We’re also moving out of state. My initial plan was to sell both homes as my rental is vacant and we’re repairing and upgrading it. Our primary is up for sale, but is a 4 bedroom home that probably requires a jumbo mortgage for most people. We can’t lower our asking price too much because we would lose money on the deal, but we are getting some showings and only about 25% complain about price.
Now, I was thinking it might be worth it to rent both my homes; or even provide a lease w/option to buy if we have to move before getting an offer.
Aside from the property management issues; what would be your approach to the situation?
Normally i’d agree. But if we can’t sell our primary soon then we’ll have to lease it as we don’t want a short sale on our record. Unless i’m missing something?
If your mortgage is that big, you’re not going to come close to getting that amount in rent. Most of the time, the higher class rentals are held by people who are losing hundreds of dollars each month on the property - and that’s if there are no repairs or vacancies.
From the sound of your post, you think you can probably get what you owe on your home if you sell. You’re right. Getting 80% of your mortgage payment is much better than having your home sit vacant, but selling your house and not paying any money each month for someone else to live there would be better. The “close enough” attitude is normally what you’ll come across from people who own one or maybe two rentals. They can’t afford to keep buying more than that because each of those rentals is an alligator. Most of the time those people keep a house they lived in before to have as a rental. Cash flow wise it doesn’t work out because they can’t get the rent they need to have a self sustaining rental, but they brain wash themselves into thinking it’s a good investment if they only pay a few hundred a month because someone else is paying down the mortgage.
I was just pondering if offering my house for a lease option would make it more affordable to sell in this market, pay my mortgage for a year, and then sell it next year.
I’m just trying to avoid the short sale and worse things.
Should I cut the price and use equity out of my rental to pay the remainder owed to the bank?
I think offering the lease/option might be a good idea, but it might also depend on how far you’re moving. I wouldn’t want to be more than a one or two hour drive from a property.
I’m in a similar situation though. We bought our primary residence at exactly the right time. It’s put our investing plans on hold, because we just can’t see a way out, and we don’t expect we’d be able to get any financing in our current situation. (Even though we have great jobs, great income, and really good credit - we’re just upside down on our current house)
I have no experience with lease options, but it seems the consensus on here is that a lease option is really nothing more than renting your house out because most people don’t convert and buy the house later. There are lots of people out there who are renting their former primary residences out because they don’t want to take the loss on selling it.
You’re going to have to decide what you want to compromise here if you can’t sell for what you’re wanting. Originally I thought you had enough equity in your primary that you could sell it and get out of it. Sounds like you don’t think so by you mentioning a short sale. It appears the decision will be between compromising your credit score and the ability to get future loans by doing the short sale. The other issue will be letting go of some of your equity in the rentals to save your credit assuming you have to do the short sale.
Neg,
It sounds like you bought your house at exactly the wrong time if you’re upside down on it.
Not sure if you tried to Refi the loans or not … We are in the process and if it does appraise for our asking price then we’ll probably do interest only and lease option. This results in about a 1K positive cash flow on the property + option fee.
Something to consider. If you need to find a flexible lender PM me.
A vacant place is no good choice at all. If you are close to sales return with rent then do it. Both way you have to sacrifice some benefit. Rent still holds some option for later. Thanks.
Buy where it makes the most sense to buy. Sell when it makes the most sense to sell.
And LIVE wherever the heck you want to live, whether or not you invest there.
If you are not currently set up to buy or lease houses out of state, then it’s just a matter of learning how to do so, and outsourcing more.
I still have several rental properties in Virginia, where i used to live. We collect payments through automatic draft. When something breaks, I call a contractor. When it’s time to fin a tenant, I get someone to put up a sign and lockbox. Unless you do everything yourself it’s absolutely posible to do.
Remember, real estate is a means to an end–giving you the lifestyle YOU want.