I am new to rei and have been racking my brain over this issue. I currently own a home in North Carolina. Bought it two years ago for 130K, financed $135K, market value (2005) $142K. In Feb of 07 House appraised for $177K. Due to refinance (took some money out) still owe approx $135K.
I am moving to New York City, this early fall, and will most likely not return to North Carolina (this is a military move). I have not ran the numbers but I know I can’t rent and make a profit. I can pay the difference between the payments and the rent for the next three years with no problems. As a FYI: I could make the full payment of the vacant house, even after splitting costs with my girlfriend in New York- DEFINITELY NOT my inteded course of action- just to show my finances and to aid in your advice.
Here are my questions:
It is a buyers market in New Bern, North Carolina right now. Should I hold on to the house, make it an LLC, and rent it, so I can sell at a better time?
Should I sell the house, take whatever I get for equity and reinvest (down-payment) into a multi-family property in upstate New York? My credit score is 740 and figure that the credit score combined with the downpayment should have me sitting pretty for a conventional loan (at a min). This would be my first investment property.
Please let me know if you need more info for your advice. Thanks a lot ahead of time. This forum is the best!
What happens if the home sits vacant? If it doesn’t support itself, it needs to go. Why are you considered upstate NY when it is so far from NYC?
I would cash out and invest the proceeds in liquid assets until such time you can find something locally.
I’ve considered that it may sit vacant for longer than I’d like but am confident that it will rent (best school district in the city, house in very good shape, quiet blue collar cul-de-sac, etc.) for a fair price.
The investment opportunities outside the city are really good- not so much inside or immediately around it. I have been talking to an investor in the area and feel this is the way to go.
If you know you won’t move back, I recomend that you sell.
Rentals are difficult to manage from a distance, and that one doesn’t even make any money.
Whatever you end up with after the sale, invest it close enough to where you will be living that you can keep an eye on your investments.
Did you use your VA entitlement to buy the NC house? If so, and you want to use it again, your only available option is to sell the NC house.
Selling for $150K will let you breakeven after selling expenses. Sell for anything higher and you bank a small profit.
I agree - SELL! Tenants are VERY HARD on rentals. Chances are that holding it will mean it needs to be rehabbed before you sell it in the future. Start with a negative cash flow, throw in a rehab, consider that the market could have significant downside risk, and I would sell it ASAP.
Sell it. If you rent it, do you have a reliable person to look out for your interest?
I see your points. How long does it typically take to sell a house?
That may be a difficult question but I’ve never sold one. I bought this one from a friend…we negotiated everything while we were on deployment and closed shortly after returning to the states.
Concern: I will have three months to move from North Carolina to New York (to be completely moved in). I have to finish changing out the flooring (not much)- I started this project but need to finish it.
You will need to list it with a realtor really. If you want to try to FSBO, I suggest looking for a flat rate listing agent for the MLS that will charge you around $200 to list and you can offer a 3% commission to the selling agent who brings you a buyer to close. Or you can go and list with a regular agent and pay the 5-6% that is normally done. If you go FSBO, once your getting to the point to move, you will then need to list with agent unless you have someone local to show the house, etc.
If you want to move it fast, make the deal attractive. Price the home at least 10% below market value. Try to be one of the cheapest in the neighborhood and advertise on as many free websites possible…
Also if your in a military town, maybe someone else on base is looking for a home or if the military has a website you can list the home for sale… Maybe another solider would like your home…
STEP 1: Forget what the property was valued at in 2005 or 2007. Get a good appraisal for what the thing will sell for right NOW.
STEP 2: Remember your own words, “It is a buyers market in New Bern, North Carolina right now…” Investing logic would dictate that you don’t sell in a buyer’s market. Unless of course the appraisal gets you in the “profit” zone even if you price aggresively. Or if there is something so extraordinary about your house that it can easily outdo all the other gazillion other properties for sale in your area.
Military move? Perhaps the base can manage the property for you while you are in NY? We have that situation here at Nellis AFB in Nevada. Since the properties are not selling, the base has offered to manage the properties for the enlisted that are transferred out of Nevada.
If you can REALISTICALLY rent it out, then it would be more prudent to hold and sell later when New Bern, NC becomes a sellers’ market. Of course you have to be willing to put in the time and resources to manage the property or hire a property manager (or if you’re lucky the military will manage for you).
Good luck - and THANK YOU for your service to our country!