This would ‘end up’ as an appreciation play, not a cash flow play.
It’s usually not profitable to invest in one single family house, cash flowing, or not, from that far away.
Any investment property is likely to cost you 50% of your retail rental income, if you keep your rents at retail.
It can be less for a while, if you defer repairs, and/or you manage yourself. Either way, you’re going to feed this property the equivalent over time.
In this case, since you’re not likely to move back to Texas, unless you know something I don’t, it’s probably wiser simply to sell it, and invest closer to home …wherever that’s most likely to be …even it means waiting a while.
That all said, you could simply feed this property, and force it to be a terribly inefficient piggy bank. That is, it’s gonna be negative for the first few years, but eventually it will pay for itself.
Meantime, if depreciation, appreciation, rent increases, and principal reduction, together outpace your overhead expenses, then maybe you should keep the property.
As far as seller financing, as an exit strategy is concerned, this is a great way to salvage a negative situation. I seller finance pretty houses I own, as my primary exit strategy.
However, unlike most seller financiers, I market to people with money, but no (not enough) conventional credit.
It’s the sweet spot, where I can get over retail and a standard down payments, from buyers that are delighted to own their own home TODAY, in nice neighborhoods, and not five years from now.
I still advertise ‘no qualifying’ financing.
Enough “unqualified” buyers are happy to give me the down payment I want, if they think they can afford the payments, that I have very little problem selling. Of course, I’m only selling on bargain terms, not a bargain price. There’s a difference.
However, that’s how you can sell even an overpriced house and make a profit.
Depending on the laws of your state, your buyer needs to be qualified to buy, through a licensed loan originator. Part of this is confirming that the financing terms and rates conform with the law.
Short of that, technically, if not legally speaking, your buyer could morph into a predator borrower.
That is, theoretically, he could demand the return of all the money paid to you, in the event that anytime over the next sixty months he “feels” he cannot afford the payments anymore. That doesn’t mean he’ll get the money, or that he can find an attorney that thinks you’re good for it, that will work on contingency, and can prove you tried to fraudulently finance the buyer in the first place.
All that just says to me is, there’s no risk here. Not to mention the defaulted borrower is now required to go through financial counseling as part of the remedy. Deadbeats won’t do that. If they had, they wouldn’t be looking for seller financing in the first place.
That’s a lot of hills to climb for predator borrower. And even if they were planning on taking advantage of you, you’re likely going to know right away, not in five years. After all even crooks get used to a neighborhood, and won’t want to move away.
Notwithstanding, my problem borrowers show themselves pretty early on, and I usually find that offering cash for keys is the fastest way to get my house back.
Meantime, there’s been an avalanche of legal research going on regarding this Frank/Dodd horseshit.
What I will tell you, is that we don’t qualify our buyers through a loan originator. It’s an expense that ranges from $1500 to $2500, that we just don’t see as cost effective.
Meantime, think ‘five years, fixed rate, 30-year amortization’ in order to meet the important standards.
As an aside, there’s no law against inducing an early payoff with interest rebates and price discounts.
As far as setting the sale price: You want to guess how much your house will be worth in 60 months, and how much of that appreciation you want to capture as a premium, for financing a buyer who can’t get conventional financing anytime soon.
Hope that helps.