Home Selling in 97266>Question Details

portlandsell…, Home Seller in Portland, OR

Can't decide whether to sell house or rent it out. Help!

Asked by portlandseller1, Portland, OR Thu Sep 12, 2013

My husband's job requires us to move from Portland to Salem. We live in a less-desirable neighborhood in Portland (Lents) but bought our home during downturn and on first time homebuyer program so the mortgage is really low. We put it on the market and tried to sell it for $225k which is 30k more than we bought it for but we've completely renovated it and put at least 25k of money into the house. I feel if we sell it for less than this we really just wasted so much money and of course our time. If we sell for less than 225k it also means we dont have enough to buy a house in salem. We are ok with renting down there (in fact already have something lined up through family). After over 1 week on market house has had zero SHOWINGS (let alone offers). Agent thinks its more realistic to get 215 or 220. Which means we now sold our house, don't have enough to buy another one, and are renters with no assets again. Should we just rent out, rent in salem, and sell pdx house in a few years?

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The market is not up to what you bought it for plus improvements do help, but lack of showings tell the story. Talk to a lender if you do not have 20% equity you will not be able to buy a house because they are worried that you will walk away from your current house once you move. Is there a penalty if you sell your house thru the program. Some have time frames for selling? If you have not rented your house out for 2 years, you have no track record of a good rental income. I would say talk to the lender first and then you can make a better decision. You will probably need 4-5 years for the Portland market to catch up and cover your 6% selling costs plus improvements and coming back from where we were. Good luck to you. Tom Inglesby, Broker, RE/MAX Equity Group
1 vote Thank Flag Link Thu Sep 12, 2013
There is no penalty, we are under the income limit for that (it is that program though with 9 years of penalty for selling). I know that we can't keep this house AND buy in salem--our debt/income ratio is too high if we do that and can't get enough from the lender. So it's EITHER sell pdx/rent salem or rent out house/rent in salem. There's really no other option (keep house and buy isn't an option, and sell house at too low to buy in salem also doesn't work and I think we are at that point.) Thanks for the advice. One thing that's concerning is the market will improve (maybe) in 5+ years but then we have to pay capital gains! Plus any repairs we have to keep doing on house. Plus damage renters may do. Plus any months it was vacant without a tenant. So it almost just feels like--sell it, break even (or make back some of the money we paid for repairs/improvements) basically walk away with like $12k cash and start over? There are so many factors its really hard to decide!
Flag Thu Sep 12, 2013
Renting your current home is not a bad alternative while we wait for the housing market to fully recover. If you feel you can get a rental client in your home that will cover your expenses, you are in a good place. If you can get more than your expenses, you are ahead of the game. Do a one year lease with a month to month option after that, so you will have flexibility if you decide to sell after a year.
Also, renting in Salem is probably a good idea for now. You will learn about the area which is new to you, and you will uncover the dynamics of the community. This will help guide you as to location when you are ready to buy a home there.
1 vote Thank Flag Link Thu Sep 12, 2013
There are rules about renting on some first time buyer programs. You should check with
Your accountant about being able to rent house out and take mortgage deduction. You have to live in a house the last 3 out of 5 years to not pay tax on any profit. Even though you fixed it up there is not a dollar in dollar out usually figure a few years. Rates are going to go up so waiting to sell in a year rates are going to be higher and it will be more difficult for buyers to qualify for a loan. If you could get a great renter it might be worth it but if the renter makes your house dirty it might cost more to fix up and sell latter. You are in a tough spot. Good luck to you . Tom Inglesbyu, broker
0 votes Thank Flag Link Sat Jan 25, 2014
The market is expected to keep moving in an upward direction for the next few years, at least until the next elections and then outlook not so good. Nobody can predict the market but any shift will take time. If it weremy property, I would lease on a yearly basis. Secure a good renter, possibly thorugh the help of a property management company and sit tight.
0 votes Thank Flag Link Sat Jan 25, 2014
I would say sell from your reply if you can make any money today and move forward. The problems with paying the money into the program because you have to sell and this is a great program for the right reasons but you had to move. You would not have capital gains if you do not make anything. There might be something in the program that says you cannot turn the house in to a rental. Ask acountant about turning into a rental and getting some write offs. Good luck to you. Tom Inglesby, Broker RE/MAX
0 votes Thank Flag Link Fri Sep 13, 2013
I would suggest you rent for a while and wait to sell until the market picks up again. ALTHOUGH, when you sale higher, you buy higher - so it is a catch 22 as they say.
0 votes Thank Flag Link Thu Sep 12, 2013
Prices should be heading up in Portland over the course of time and rental prices are very high. You may want to consider that option (give your particular situation).
0 votes Thank Flag Link Thu Sep 12, 2013
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