Foreclosure in 27410>Question Details

Susan, Both Buyer and Seller in Greensboro, NC

Bought new home. Should we rent our existing townhome and wait until the market turns around or sell it now?

Asked by Susan, Greensboro, NC Mon Oct 29, 2007

Help the community by answering this question:

Answers

13
Susan
I do not know your market...(disclaimer!)
I recommend:
1. Talking with a CPA about the tax consequences of keeping it as a rental or selling...project out 5-10 year4s)
2. My wife and I became accidental investors that way. It was the best move we ever made!
3. Proverb from the bible: Wise is the man that uses the counsel of many. Get good, accurate advice, talk with some Realtors with investment property experience.
Keith
1 vote Thank Flag Link Mon Oct 29, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Well i congratulate for your new home, but would recommend you to wait & watch the market condition. Basis on which you can take a decision, but at the meantime you can rent out townhome, through this procedure you can also earn every month some substantial amount.
0 votes Thank Flag Link Thu Mar 13, 2014
I would ask around the community in regards to what rents are going for. If you're inexperienced with renting I would contact a local property manager to assist with finding renters. I can be a great stream of income. Also have an agent do a CMA of your townhouse community to see what you could possibly sell it for. Once you gather that information you might know which direction you will go from there. 336-558-8385
0 votes Thank Flag Link Thu Mar 13, 2014
Do you want to be a Landlord? That is a very important question to ask your self. Check with someone you know who may already have rental property and ask them how much time and effort will there be on your part.
I Have had rental properties for 25 years. There are many positive aspects as well as some negative. Karen Gallop 336-988-3181
0 votes Thank Flag Link Mon Jan 14, 2013
Susan I would say it depends on the townhome. It costs you nothing to have an agent come out and give you a Comparative Market Analysis for your townhome. They can tell you what the homes in your area are selling for and how long they are sitting on the market. A Good agent can help advise you on the best course of action for you at this time. Whether that be to sell or to lease your townhome. Of course you can also offer it to sell with the option of lease to purchase getting someone in ot offset your mortgage payment and gaining you a option downpayment. Set the lease at say six months and that gives you a tenant and a possible sale. Just remember you do not pay a commission until the unit sells. Please remember to consult an attorney if you decide to lease with an option though.

If you need any help just let me know.

Larry Story
Coldwell Banker Triad
larry.story@coldwellbanker.com
0 votes Thank Flag Link Sun Feb 3, 2008
It depends on a lot of factors not presented in your question. The two most critical deal with your own financial situation and the market (rental and sale) of your townhouse.

The first element is the market for townhomes in Greensboro. How much could you sell it for now? And would that result in your bringing money to settlement? Or would you end up with some cash? Similarly, what would the rent be for your townhome? And would that result in a positive or negative cash flow? (Without going into details, recognize that you'll have a lot more expenses than just PITI (principle, interest, taxes, and insurance). You'll have repairs and upkeep. You should account for potential vacancies. So that's the first set of questions: Can you afford to sell now? And, if renting, what would your cash flow look like?

The next set of questions deals with your own finances. What would your financial picture look like if: (1) you sold now, (2) you attempted to sell now, but were unable to (i.e., vacant property for 4-6 months), and (3) you rented the property out for a while? Hypothetically, let's say that you could sell now and break even...versus renting out for a $300 a month negative cash flow. How long could you tolerate the $300 a month negative? (Yes, on your tax return, it's probable that losses on the rental could be deducted from your income....check with your CPA....but that could be a very uncomfortable position to be in.) And be careful of thinking, "Well, $300 a month isn't great, but I'd like to hold out for the market upturn, when I'll make all that back." A lot of people facing foreclosure today thought the same thing...that a market upturn would correct their poor decisions. It didn't work. Yes, the market could turn around next spring...but (personal guess, and I don't have a crystal ball) I wouldn't bet on a market turnaround for another 3-4 years.

So: Check with a CPA on how those choices would affect you. Look at your own financial situation, both factually and emotionally (what would you be comfortable with?). Check with 3 Realtors to get their opinions on what you could rent or sell the townhome for. Then decide. Having said all that, my personal suggestion would be to strongly consider selling now, if you can afford to. But, please do your due dilligence.

Best wishes.
0 votes Thank Flag Link Mon Dec 17, 2007
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
I would rent it and take the loss IF it makes sense. It may take 2 years for the market to completely turn around depending on your area. Make sure the "carry" is worth the gain in a year or two.
0 votes Thank Flag Link Mon Dec 17, 2007
Our market seems to be saturated with new townhomes and it has been a little more difficult to sell a townhome in the past months. However, a well cared for home, priced right, still stands a good chance of selling. DON'T BELIEVE THE MEDIA!!!! Greensboro, NC has not seen the "bubble burst". We never had a bubble to begin with. There has not been an above average or artificial increase in property values in our market. We are not seeing a slow market. We are simply back to the normal market, now that mortgage lenders have tightened the purse strings.

I would be more than happy to provide you a property analysis and marketing paln for your townhome. It will be helpfull in making your decision.
0 votes Thank Flag Link Wed Dec 12, 2007
In a down market renting may be the answer. If you had to make a bridge loan to buy the new house, I would consider trying to sell. I like Keith's advise. Ask some professionals. What do the property management companies say about renting in today's market? Ask the experts.
0 votes Thank Flag Link Mon Oct 29, 2007
Renting a home is a great way to weather a temporary downturn in the market. However, the key to success is to rent it right. When comparing if renting is financially beneficial, compare your entire closing costs and a projected sales price that's appropriate for your neighborhood. For the rental side, here are some factors you need to consider:
1. Your mortgage with taxes and lanlord insurance
2. Vacant months (your mortgage divided by 12 for every month your home vacant)
3. Expenses related to maintenance
4. Expenses related to excessive damage when the tenant vacates (new carpet / paint)
5. Expenses if you hire a property manager or an agent to find a tenant
6. Utilities (If you decide to pay water / sewer, cable)

Total up your expenses for a month and if you can make it work at the rental rates in your area, then its a good deal. If you're loosing a little each month, make sure its not more than if you had to take a loss one time. Hope this helps
0 votes Thank Flag Link Mon Oct 29, 2007
If you decide to sell I would recommend that you price it aggresively so that it doesn't sit on the market for a long period of time and you get an offer ASAP. If you rent you need to take into consideration what you can afford betwen the two mortgages (if you still have one on the original home) if you end up being negative because your rent can't cover the mortage note. You also need to talk to your agent and/or tax professional and be aware of the IRS' rules for period of ownership & exclusion of any gains.

Best Wishes,

Freddie Diaz
Web Reference: http://freddiediaz.com
0 votes Thank Flag Link Mon Oct 29, 2007
You could list it both ways and see what hits first. There are a lot of considerations when becoming a landlord. Be sure you discuss this with whomever you choose to market your townhome.
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Mon Oct 29, 2007
First, do you want to be a landlord? It is all dollars and cents if it is going to be an investment... Talk to your local Realtor to see what it can rent for, what are your carrying costs, speak to your accountant. The market has turned in most areas and it depends if you are comfortable with the suggested sale price.
Web Reference: http://www.bparkes.com
0 votes Thank Flag Link Mon Oct 29, 2007
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer