Home Selling in 78750>Question Details

Douglas, Home Seller in Austin, TX

I have a question of the timing of selling my leased house.

Asked by Douglas, Austin, TX Wed Dec 30, 2009

I have a house leased till August 2010. I am not sure if I should start to sell it at the beginning of 2010 with the hope that the market is better because of the tax credit or I should continue to lease it and sell it in 2011 or later. My tenant pays the rent on time and the rent covers most of the mortgage and property tax. However I do need to pay some of it from my pocket. My house is located near Westwood high school and was built in 2003. Any suggestions are welcome. I appreciate it your help!

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Answers

7
Douglas, are you with "Lucy" in the Parke neighborhood?

The question that remains to be decided: Do you "want" to sell it?

You may not be the type that enjoys being a Landlord.
In that case, selling it could easily be justified.

From a basic outlook, it's a 7 year old home, and right now may be a good time for you to cash -, opposed to 2013 simply because at that point, the roof and A/C will be "middle aged" and many of the features that look "updated" today, may not look updated in a few more years (including the granite counters, the updated hardware you have, the back deck and fence).

Those features all show well today, in their prime. Additionally, the appliances would be showing signs of aging and dating at that point.

Collectively, by waiting a few more years, you may see a few more dollars in overall market "appreciation" and your equity would still increase by having tenants pay your mortgage note, however you could also be approaching the point where you run into issues with value by "outdating" the Home-Buyer's needs at that time. Therefore, it may be closer to a wash-out, and you'll simply have spent a few years managing an asset.

I think that house for you is a good, safe investment as it stands. It appears to be bringing you over $400 per month in positive cash flow.

A couple suggestions/options here to choose from and review with your Realtor:

1.) Refinance your note with today's low interest rates, and take advantage of a 10-year or a 15-year mortgage note so all of your rent money goes directly into paying it off. Then, hold on to it for at least three years while your equity grows and your refinance fees are justified.
or
2.) Continue operating as-is, and put your cash flow into another investment, or simply use it to "buy down" the principal on your current note.
or
3.) Sell the house now while it's freshly marketable and while the "First-Time Home Buyers" are in pursuit. (this will require a deal be made with your tenant to cooperate with Brokers, live clean, and be ready to exit with a 30-day notice). Also, first ask your tenant if they would like to buy it!

Anyhow... let me know if this helps!
And, feel free to call or email me to schedule some time to discuss in more detail.

Shawn Monshaugen
Keller Williams Realty
#1 Selling Broker in Austin
"Ask about our Signature-Series Listing Service"
512-330-1075
Shawn@ShawnMon.com
1 vote Thank Flag Link Wed Dec 30, 2009
Doug, I'm a broker and investor, and I have a home in the same area. I'm looking for more investment properties in the area, so if you want to email me some info on the house, lease details, desired sale price, photos (if any) etc., I'll do some research and get back to you quickly.

Thanks.

Guy E. Gimenez ABR, CRS, GRI
CMG Group, LLC
512-507-5864
info@FastCash4AustinHomes.com
0 votes Thank Flag Link Wed Dec 30, 2009
Hi Douglas, First and foremost the lease takes precedence over the sale. That means the only person you might be able to sell the house to is an investor. Also in the lease there is a clause that limits the number of days you may show the property before the lease expires so you need to review that clause. The good news is that an investor is more willing to purchase the property when there is a lease in place so there is instant income. Austin real estate generally will not give the investor a cap 10 rate on a residential lease because property values are too high and the cost of a lease is generally reasonable. This is true in any market in the area as a rule. Since a first time homebuyer must live in the house to receive the $8000 government rebate that does not help. However, this is a good market to sell a house if it is priced right and investors are always looking for a good deal. If the house is updated and in good repair that attracts an ivestor. If it is in need of a lot of work and new appliances, an investor would only be interested if the price is below market. Hope this helps. Donna Watson, GRI
Web Reference: http://www.donnawatson.com
0 votes Thank Flag Link Wed Dec 30, 2009
Dear Douglas,
The answer really depends on your schedule. You could list it for sale in early 2010 and hope that another investor is looking to buy in your neighborhood. The tax credit extension through April 2010 may be a boon for you. The season that is most active for selling is typically Spring/summer. If you want a comparative Market Analysis for your property let me know and I would be happy to send it to you.

Sincerely,

Betina Foreman
Keller Williams
Austin Texas
(512)771-6318
0 votes Thank Flag Link Wed Dec 30, 2009
Douglas- Great question. I would definitely look at putting it on the market asap. The tax credits will expire by June and are a great benefit to a buyer. In addition, investors (like yourself) prefer property that is currently rented and with a good history of rentals. We expect the spring to bring lots of listings to the market. The sooner you can get the attention of the market, the better. The only trade off is going to be if someone is a first time home buyer and wants to move in quickly but you and your agent can work that situation out....
0 votes Thank Flag Link Wed Dec 30, 2009
Are you willing to risk losing your tenant over the annoyance of multiple showings?

Get an accurate valuation.

Offer it to your tenant as a purchase.
0 votes Thank Flag Link Wed Dec 30, 2009
Douglas:

Hello. I would first start by asking what your overall goals are - long term investment, short term cash gaine.... With the answer to this it will help determine the right course of action. I would be glad to help you with this. Feel free to give me a call to chat about it.

Ritch Haenke
5127.633.3909$
Rhaenke@sbcglobal.net
0 votes Thank Flag Link Wed Dec 30, 2009
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