Financing in Carmichael>Question Details

tmvu2000, Home Buyer in 30274

Should I sell or should I rent my house?

Asked by tmvu2000, 30274 Sat Aug 25, 2012

Hi experts, I would like your opinion about whether I should sell or I should rent out my house. I bought my house new in 2004 for 140k. Now I currently have 70k left in my loan. I recently ask 2 of my neighbors who sell their house and they tell me the banks only approve the loans for buyers around 60k in my subdivision. I would like to sell my house and move to another area but I don't know if I want to sell it in the 60k. Should I rent out and if I rent out what is the process for rent out a house?

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Maria Cipollone’s answer
You should hire a Real estate professional to rent out your home. As long as you rent out to somebody with good credit, good payment history and great references you shouln't have any problems in the future.
Is it encouraging to see a growing number of metro areas with rising, median prices, which is improving the equity of existing home owners.

Good Luck,

Maria Cipollone
0 votes Thank Flag Link Wed Sep 5, 2012
The zip code of the poster is for Riverdale, Georgia where the median is in the $60K range - not Carmichael, California.

This reminds me that there is a huge disparity between the values of homes in California and homes in the deep south. The disparity existed before, during and after the bubble.

I remember talking to hundreds of displaced southerners after the Katrina, Rita and Wilma hurricane trifecta of 2005. Comparable homes were one fifth to one half of the value of homes in our region and about a tenth of the value of homes in the SF Bay area. I think the ratios are still in that range.
0 votes Thank Flag Link Wed Sep 5, 2012
Jim Walker, Real Estate Pro in Carmichael, CA
I have personally always been one who believed in keeping homes for renting out. I am, for the first time, changing my mind and believing that real estate as an investment may not be viable in the short term.

Don't get me wrong, I still believe in owning your own home but owning property for investments may be more risky.

It would be risky if you've never been a property manager, and will not be local to handle the issues related to home ownership.
It would be risky if you need the equity to be more liquid for your investment portfolio. And,
it would be risky if you are believing that the home will be increasing in value in the near future.

My opinion may not be popular but I am studying some economists viewpoints. Until we have jobs, the economy cannot be improving based on reality. The current low interest rates are because the government is printing money and keeping it low artificially to stimulate the economy. Sooner or later, with the deficit running so high, the interest rates will need to start increasing. When the interest rates start increasing, the property values will decrease more.

We are having an increase in property values right now based on the simple fact of supply and demand in Sacramento. There are few houses, and there are alot of buyers who want to buy a home with a low interest rate. So you can get a higher price than you could a year ago. That increase will continue until the interest rate starts to rise.

Your circumstances may be different, but based on your question, I think selling might be a better option under most situations.
0 votes Thank Flag Link Tue Sep 4, 2012
I love rental property as an investment. However, long distance landlording, and unintentional landlords don't always work out very well. There's tons of factors involved here. Although, two things to give serious consideration to, are do you really want to be a landlord, and how far away are you moving? If you will be more than an hour away, I'd say sell it. My experience with long distance landlording has been terrible. If you will be fairly close by, and you are prepared to be a landlord, I'd say rent it and hope some of your value recovers before you sell. Good luck.
0 votes Thank Flag Link Mon Aug 27, 2012
You received some great information back. I just want to add a little on what's already been written back to you.

I've had clients in the past that in the same situation you are in now. I had a few sell there home, and a few ended up renting there home.

So what I've seen is that some are not cut out to be land lords and rent, and some wanted to rent but they decided to sell.

You mentioned your moving out of the area so on top of moving and reloacting do you have the time, money, and patience of being a land lord. On top of your mortgage payment garbage, property taxes,etc. I would not tackle being a land lord if your are going to move out of town. I would highly recommend a property management company which will add a little bit more on expenses.

If you feel you can handle the ups and downs of renting then I would hire a property management company in your area and rent it out. That way from what you wrote on the value your not coming in with $10,000.00 to $15,000.00 to close escrow.

If you don't have the time and you are financially able to cover the difference from sale price to your pay off amount then I would sell.

As stated earlier you need to do the pros and cons and see works best for you.
0 votes Thank Flag Link Mon Aug 27, 2012
thank you for all of your input.
0 votes Thank Flag Link Sun Aug 26, 2012
You will also want to find a local realtor to determine what the market value is rather than just relying on your neighbors opinion. The realtor can also do a net sheet to determine the net proceeds of a sale. You may have to bring some money to the table to close the deal.

You can then use that information with the info about renting to make your decision. Depending upon your market, you'll need to weigh the pros and cons of getting on with your life vs waiting for the market to return.
0 votes Thank Flag Link Sun Aug 26, 2012
Add up all your costs of ownership: The main costs are mortgage payment, property insurance, property taxes, maintenance, water, sewer, and garbage. Because you will be out of area, property management by a property management agent is probable. Then find out what you can probably rent your house for.

If there is a positive number remaining after subtracting the expenses, I would choose the decision to continue to own until property values increased enough for you to sell and put something in your pocket. My reasoning is that receiving even a small amount of money every month is better than paying a large chunk of money to sell it now.

Two problems I have with this post though. There are no homes built in 2004 in Carmichael, CA 95608 that would be worth less than $100,000. So I think your question was posted in the wrong zip code.
0 votes Thank Flag Link Sat Aug 25, 2012
Jim Walker, Real Estate Pro in Carmichael, CA
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