SheikYerbuti Posted August 25, 2010 Share Posted August 25, 2010 You're moving. Choose: 1. Sell your current house in the worst market in decades. Take a bloodbath, get what you can, and move on. 2. Turn your house into a rental property and try to find the right tenant, recoup some of your investment, and try to sell it a few years down the road in a hopefully better market. Assume for the sake of simplicity that the house is paid off. Carrying costs would only be the real estate taxes and insurance. Quote Link to comment Share on other sites More sharing options...
whomper Posted August 25, 2010 Share Posted August 25, 2010 Id choose # 2 and try and cover the taxes and insurance with the rent you bring in , which shouldnt be hard if there is no mortgage. You also keep the tax benefits Quote Link to comment Share on other sites More sharing options...
Chief Dick Posted August 25, 2010 Share Posted August 25, 2010 Depends on how bad the bloodbath is. It may be easier to take a hit now instead of having to worry about maintaining a rental, choosing tenants, etc. Who knows when the market will ever rebound. Quote Link to comment Share on other sites More sharing options...
moneymakers Posted August 25, 2010 Share Posted August 25, 2010 What kind of shape is the house in now. If it is sale ready. sell it. will you have to replace roof/hvac in 5 years? If yes? Than sell it. If no mortgage on house than tax benefits are very minimal. Actually depreciation tax benefit may end up costing you big time if Bush tax cuts are repealed. You also lose your homestead for property taxes . I would sell this house and buy 5 more that will cash flow with the equity that you receive. Interest rates are your best friend right now. Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted August 25, 2010 Share Posted August 25, 2010 it is very possible the market gets worse before it gets better. the price is what it is, don't base your decision on an assumption about it getting back to where it was in the past. the question is, do you want to be a landlord and a real estate investor, or would you rather spend your time and take your chances with something else? Quote Link to comment Share on other sites More sharing options...
wiegie Posted August 25, 2010 Share Posted August 25, 2010 Add me to the list of people saying that if you have always wanted to be a landlord, then go for it. Otherwise, I wouldn't sit around waiting for the housing market to recover. Quote Link to comment Share on other sites More sharing options...
muck Posted August 25, 2010 Share Posted August 25, 2010 Also, if we have deflation, you'd be far better off renting now and buying again later on. Quote Link to comment Share on other sites More sharing options...
Ramhock Posted August 25, 2010 Share Posted August 25, 2010 These rates have got to go up in the next few years, don't they? If not, great. But when they do, housing prices go down, again. I am in Delaware, bought a townhouse for 220K, 8 years ago. Market had it at 310K, at the peak, now 270K. I think it has to keep heading down, at some point. I would sell & get it off my mind. Quote Link to comment Share on other sites More sharing options...
The Holy Roller Posted August 25, 2010 Share Posted August 25, 2010 Be a landlord. There's some guys with motorcycles gonna be looking for a new place today. Quote Link to comment Share on other sites More sharing options...
matt770 Posted August 25, 2010 Share Posted August 25, 2010 If the house is paid off, easy decision for me: sell. I don't want the headaches of being a landlord or having to worry about repairs. If there were indications the market was rebounding, I might hold off, but there is no end in sight. You'll recoup less when you sell because of the market, but also pay less for your new home. Quote Link to comment Share on other sites More sharing options...
Azazello1313 Posted August 25, 2010 Share Posted August 25, 2010 the news out there isn't great. that with interest rates at all time lows and propped up with false demand in the form of government subsidies. yeah I wouldn't be sitting around waiting for a big recovery any time soon. Quote Link to comment Share on other sites More sharing options...
TimC Posted August 25, 2010 Share Posted August 25, 2010 I guess it really depends on if you want to be a landlord. What a pain in the ass thankless bullsheet job that can be. Not to mention you get some renter that will likely trash the place that just wants to party in Atlantic City for awhile. Oh, unless you're the few lucky ones that gets a decent renter. Good luck with that. I probably lean towards selling if the house is free and clear. I think hanging on to it for the decade (at minimum) it's gonna take to bounce back is not gonna be worth my time and effort to fix someone's sink that breaks the Saturday I'm on vacation. Quote Link to comment Share on other sites More sharing options...
SheikYerbuti Posted August 25, 2010 Author Share Posted August 25, 2010 the news out there isn't great. that with interest rates at all time lows and propped up with false demand in the form of government subsidies. yeah I wouldn't be sitting around waiting for a big recovery any time soon. It wouldn't take a big recovery to make renting a good investment. If I can make, let's say 20K in profit by renting the house for 2 years, then sell it at the exact same price it would have sold for this year, that makes up for a lot of the loss between purchase price and sale price. Quote Link to comment Share on other sites More sharing options...
Controller Posted August 25, 2010 Share Posted August 25, 2010 Also consider the income tax consequences of selling the house- if it is free & clear, your basis is probably very small compared to the selling price, even in this depressed market. As a result, you might have a hefty income tax hit if you sell. Quote Link to comment Share on other sites More sharing options...
Furd Posted August 25, 2010 Share Posted August 25, 2010 (edited) I guess it really depends on if you want to be a landlord. What a pain in the ass thankless bullsheet job that can be. Not to mention you get some renter that will likely trash the place that just wants to party in Atlantic City for awhile. Oh, unless you're the few lucky ones that gets a decent renter. Good luck with that. I probably lean towards selling if the house is free and clear. I think hanging on to it for the decade (at minimum) it's gonna take to bounce back is not gonna be worth my time and effort to fix someone's sink that breaks the Saturday I'm on vacation. For once, Timmmayyyy makes sense. You don't want to rent your house to anybody that you don't know unless somebody that you trust vouches for them. Professional tenants play the system. They'll pay rent for a few months and otherwise appear to be a solid tenant. One day they'll decide to stop paying rent and they will stay for as long as you let them, anticipating that they will get at least of few rent free months. You'll have to file an action to evict them. They'll vacate the premises the day before the order of eviction is enforceable. If you're lucky, they won't trash the place or steal anything. I wouldn't count on either. Edited August 25, 2010 by Furd Quote Link to comment Share on other sites More sharing options...
TimC Posted August 25, 2010 Share Posted August 25, 2010 For once, Timmmayyyy makes sense. You don't want to rent your house to anybody that you don't know unless somebody that you trust vouches for them. Professional tenants play the system. They'll pay rent for a few months and otherwise appear to be a solid tenant. One day they'll decide to stop paying rent and they will stay for as long as you let them, anticipating that they will get at least of few rent free months. You'll have to file an action to evict them. They'll vacate the premises the day before the order of eviction is enforceable. If you're lucky, they won't trash the place or steal anything. I wouldn't count on either. We call them Audi drivers here. They act a big game while they're at the starting line and then quickly fizzle out by the time they hit the 1/4 mile mark. Quote Link to comment Share on other sites More sharing options...
Furd Posted August 25, 2010 Share Posted August 25, 2010 We call them Audi drivers here. They act a big game while they're at the starting line and then quickly fizzle out by the time they hit the 1/4 mile mark. You have been insufferable ever since the Corvette wrested the King of the Trailer Park honors from the Mustang. Quote Link to comment Share on other sites More sharing options...
TimC Posted August 25, 2010 Share Posted August 25, 2010 You have been insufferable ever since the Corvette wrested the King of the Trailer Park honors from the Mustang. Holy crap...a Chevy won something?!!? Quote Link to comment Share on other sites More sharing options...
yo mama Posted August 25, 2010 Share Posted August 25, 2010 (edited) Also consider the income tax consequences of selling the house- if it is free & clear, your basis is probably very small compared to the selling price, even in this depressed market. As a result, you might have a hefty income tax hit if you sell. Careful. The first $250,000 of capital gain - not sales proceeds - is tax free. If you're married, its $500,000. So unless we're talking about selling for $500,000 MORE than you bought the place for, there should be no capital gains tax. (If the seller is married). And even if there were tax, the cap gains rates is at a historic low in 2010 and slated to go up in 2011 if/when the Bush-era tax cuts expire at the end of this year. As far as being a landlord, I would go that route IF AND ONLY if I was going to be physically present to deal with the property. Being a long-distance landlord is a recipe for disaster. But keep in mind, I'm special. I'm good a doing my own home improvements and I'm an attorney. So I'm in a better position than most to deal with the typikal renter-related BS. I'd then take the net rental income and just dump into the new mortgage, pay that bitch down as fast as I could, turn that into a rental in 7-8 years, then wash, rinse, repeat. But that's me. Edited August 25, 2010 by yo mama Quote Link to comment Share on other sites More sharing options...
polksalet Posted August 25, 2010 Share Posted August 25, 2010 Dave Ramsey is now bullish on housing prices. Quote Link to comment Share on other sites More sharing options...
SheikYerbuti Posted August 26, 2010 Author Share Posted August 26, 2010 Not to mention you get some renter that will likely trash the place that just wants to party in Atlantic City for awhile. Oh, unless you're the few lucky ones that gets a decent renter. Good luck with that. Background check. Credit check. References. Previous landlord references. Proof of employment. Interview. It's work, but I think it's possible to get a responsible tenant. Quote Link to comment Share on other sites More sharing options...
Big Country Posted August 26, 2010 Share Posted August 26, 2010 Background check. Credit check. References. Previous landlord references. Proof of employment. Interview. It's work, but I think it's possible to get a responsible tenant. If it's pretty much paid free and clear, then you could also get a property management company to handle the large majority of this..... you just collect your check from them each month, they get a cut. Assuming you can rent it for more than the monthly mortgage, if any, that is due, not neccessarily a bad option, especially if you want to keep open the idea of moving back to the same place in Jersey down the road. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted August 26, 2010 Share Posted August 26, 2010 most prop mgmt companies take atleast 1mo rent, some more. Quote Link to comment Share on other sites More sharing options...
Puddy Posted August 26, 2010 Share Posted August 26, 2010 Background check. Credit check. References. Previous landlord references. Proof of employment. Interview. It's work, but I think it's possible to get a responsible tenant. With todays rates and prices those people don't rent. They buy. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted August 26, 2010 Share Posted August 26, 2010 With todays rates and prices those people don't rent. They buy. even tho rates are low, many cant get approval. Quote Link to comment Share on other sites More sharing options...
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