Currently Own On Proposed Beltline, But Want to Move. Should I Sell Or Rent My House?

Asked by Atlrez, Atlanta, GA Tue Nov 29, 2011

I currently own a home (For 5 years) on the proposed Beltline (the tracks are in my backyard), however I am torn on if I should sell now or rent it out. I am wanting to move to a different part of the city and into a new townhouse. Currently, if I sell the house I suspect I would take up to a $15K loss on the property. And if I rent, I should be able to cover the existing mortgage payment with what homes are renting for in the area.

So should I hold out for the 10 years it may take before the Beltline is complete to hopefully reap the equity rewards it will bring or should I cut my losses now and move on?

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Answers

21
davidwbrower, , Woodstock, GA
Tue Nov 29, 2011
Only you can determine if you want to take a loss now or hold out and rent. If you bought 5 years ago (2006) you paid at peak of pricing and most likely are upside down. You might want to consider hiring an agent that both lists to sell and lists to rent and have them complete a CMA (comparable market analysis) to truly determine your home's value so you can make an educated decision. Also, have your agent you hire give you the same analysis about fair market rent. Then, make a decision based upon your personal goals now and in the future. Also, discuss your options with a lender b/c you might not qualify for another loan based upon income, debt, and the fact you have a mortgage on house #1. Gather all the information you need and make an informed decision that best meets your needs and goals.
2 votes
Lynn B Fried…, Agent, Atlanta, GA
Tue Nov 29, 2011
Dear Atlrez,
I am prejudiced because I am a big fan of the Beltline. Full disclosure. Of course, I say -- Keep it. Take a class or go online and educate yourself about being a Landlord. John Adams says NEVER tell the Tenant you own it --- let Tenant think you MANAGE the property for less difficulty with requests. Learn the system.

Right now on http://www.ActiveRain.com, a debate is raging about what a Landlord should be responsible for and what a Tenant should be required to pay. What lease will you use? On and on and on ...

I read all the answers you received and you are lucky - you got some great advice. Re-read Lee Taylor's comments. Brian Maguire gives sound advice - Yet only you may decide if you are the Landlord type. As Greta Thomas says - "Renting has its own challenges, for instance are you prepared to wait to find the right tenant?"

Have a happy day -
Lynn
PS IF we may help in any way - we are here. L.
Web Reference:  http://odatrealty.com
1 vote
Lee Taylor, Agent, Decatur, GA
Tue Nov 29, 2011
I gave out a few thumbs up - good answers.

Atlrez - are you sitting on Allene or Glenwood? Are you in Collier Hills or Poncey Highland? We don't have enough information about your backyard to know how to advise you...

Altogether, the 22 mile loop of the Beltline will have a different impact in the next ten years on certain areas vs. other areas. I am excited about the potential, but knowing what I know, I can only advise that you hold a property that you bought in 2006 - the likelihood is that if it were for sale 5 years ago in it's current condition, then it's value would be 25-50% higher then, than it is now...

How much of a loss is $15,000 in your world?

Do you know something that the rest of us don't know about the Beltline being ready, in your backyard, in ten years or less?

Get some local advice.
1 vote
Lisa Crowder, Agent, Atlanta, GA
Tue Nov 29, 2011
The others are right. It really depends on your situation. Not everyone has the stomach for being a landlord. And don't forget, after 10 years of being a rental, your home is unlikely to be in as good shape as it is now. Renters can be very hard on property even if you, as the landlord, do a good job of maintaining it. If you've got the ability to get a new mortgage while maintaining your current home as a rental, and the intestinal fortitude to be a landlord, you may be able to reap financial rewards at some point in the future, but that's certainly not a given, and as others have pointed out, there's always the possibility that you'll have difficulties at some point along the way in keeping your home rented out, so there may be times when you have no cash flow to cover the existing mortgage. Real estate is an investment and like any investment it entails risk. Your own level of tolerance of risk will have to guide your decision. Good luck!
1 vote
Julia Meadows, Agent, Dunwoody, GA
Tue Nov 29, 2011
Renting would be a good option to save the equity. First make sure that you speak with a loan officer to make sure that you can be approved for a loan if you hold the property.
1 vote
Aaron Mtuanwi, Agent, Conyers, GA
Tue Nov 29, 2011
You have the answers. Better to rent since it can cover your payments and you do not have to take up that huge loss.
But it also depend on what you intend to do if you move - buy OR rent.
Buying will factor in your existing home, and you know how that goes. You will have to qualify for both homes.
Holding on will always be your best bet.
1 vote
David Herren, Agent, Atlanta, GA
Tue Nov 29, 2011
It depends. Is your home on a part of the Beltline where the trails are currently under construction or complete? If so, this provided an immediate premium. However you must consider what part of the city you live in too. Some areas touched by the Beltline will rebound in the real estate market much sooner than others. Give me a call at 404-425-4945 if you would like to discuss your particular situation.
1 vote
Scott Askew, Agent, Atlanta, GA
Tue Nov 29, 2011
The answer lies within. Only you know your circumstances/desires.

If the rent received covers your expenses, and if a mortgage broker will approve you for a loan to acquire a replacement property, renting may be the financially sound route to go.

While no one has a crystal ball, one would think values would start to climb over the next 5 - 10 years.
1 vote
Brian Maguire, Agent, Atlanta, GA
Tue Nov 29, 2011
Belt line or not, my advice for folks is to hold onto property if you can. Sure, I love to list and sell homes, but your best interests need to be taken care of first and foremost. If you can manage holding onto the house as a rental, do it. Belt line may factor in someday, and it is creating a bit of a buzz now, but it is still a better decision to hold onto it in my opinion.
Web Reference:  http://Buy-Atlanta.com
1 vote
Adam Morrison, Agent, Atlanta, GA
Tue Nov 29, 2011
Hi Atlrez, it really depends on the exact area, the comparative market, how much you have left on your mortgage, and how much you could get for rent, as well as other factors. If you'd like to discuss your situation further, please feel free to contact me but those are general considerations that I would take into account if I were you.

Adam Morrison
adamhanm@gmail.com
Web Reference:  http://atlhomes.net
1 vote
Brian Maguire, Agent, Atlanta, GA
Thu Jan 5, 2012
Web Reference:  http://Buy-Atlanta.com
0 votes
Aaron Mtuanwi, Agent, Conyers, GA
Thu Jan 5, 2012
Watch the news. Things are getting better. Hold on a little longer and smile.
0 votes
Jeff Holloway, Agent, Sebastian, FL
Mon Dec 26, 2011
Short answer; How old are you? If you could wave your magic wand and get what you wanted, what would it be? Being a landlord or moving on with your life?
0 votes
Sally English, Agent, Atlanta, GA
Wed Dec 7, 2011
Lee Taylor asks the right questions, as usual.

My advice, answer Lee's questions. Add to them
1. Seeing a mortgage lender to get pre-qualied for a purchase of the next home. The question of what you are doing with your present home will come up. Find out if you have t sell it to buy the next one.
2. Keep it and lease it if you can. Owning real estate is still good way to diversify an investment portfolio. I own investment homes. A 15 year mortgage will help create discipline in your monthly investment plan.
3. Check out the competition. Too many rentals is nor healthy for most neighborhoods. If you are facing a lot of rental competition, lean toward selling and taking the loss.
4. If you sell, how will you cover the loss. Do you have to bring cash to closing? Do you have the cash? Are you eligible for a short sale?
Web Reference:  http://englishteam.com
0 votes
Brian Maguire, Agent, Atlanta, GA
Thu Dec 1, 2011
Hi Altrez, and my fellow colleagues - here is an article I just found about some grant money that has been awarded that will benefit the Belt Line - interesting read!

http://eastatlanta.patch.com/articles/ponce-city-market-deve…
Web Reference:  http://buy-atlanta.com
0 votes
Tyler Willis, Agent, Atlanta, GA
Thu Dec 1, 2011
Hi Atlrez,

As long as you are ready to become a landlord and if the rent will cover your mortgage I say why not rent it out and wait a bit to sell. Just curious, what part of the city are you thinking of moving too?
0 votes
Aaron Mtuanwi, Agent, Conyers, GA
Tue Nov 29, 2011
Hi,
It is good that you know more than the basics already.
Talk with a lender to see how much you qualify for and take advantage of owning a second home at less than half price. You should be better off.
I can always recommend lenders to you and also assist in your dream home search.

My Pleasure, Your Satisfaction.
0 votes
Atlrez, Home Owner, Atlanta, GA
Tue Nov 29, 2011
Thanks All who have answered so far. I would ideally like to buy a new place. I understand that I would need to be able to cover both mortgages, which I would financially be able to do. I also know that doing so would limit how much new house I would be able to get approved for. I am not expecting to use the rental income to obtain a new mortgage.
0 votes
Veronika Bar…, Agent, Roswell, GA
Tue Nov 29, 2011
Atlrez,

To advise you better we must know if you planning to buy a new house or rent it. Also, if you are planning to finance your next purchase or buy it for cash. Julia and Aaron are right; you need to find out from a lender if you qualify for both mortgages. A rental income from your existing home will count only if 2 conditions are met: it shows 2 years of good rental history, and, it has least 30% equity in your existing house.

Good luck!
0 votes
Caroline York, Agent, St Petersburg, FL
Tue Nov 29, 2011
You say the beltline is in your backyard. If you can rent your home today for an amount you are happy with that is great. But remember what the construction of this beltline is going to do to your "backyard" during the time frame of construction. Your rental income could be affected negatively just as the sale price of your home could suffer if you need to liquidate during that time period. The housing market fluctuates locally as well as nationally. If it is a good time to buy the property across town then do so but keep in mind the local or neighborhood market of the home near the beltline. Keep this all in mind and then do the math.
0 votes
Greta Thomas, Agent, Atlanta, GA
Tue Nov 29, 2011
It really depends on your goals and if you are prepared to wait for 10 years. Renting has its own challenges, for instance are you prepared to wait to find the right tenant? which means that you maybe paying two mortgage payments for a month or two. Will you be hiring a managment company to rent your property and if so are you prepared to pay the fee every month? It is good to own rental properties for investment purposes but you have to decide if you are up for what it takes to hold on to it. I manage 12 properties so I know what my landlord go through to maintain their properties. Selling might be a good option but it all depends on several things. I would be happy to meet with you to discuss in depth if selling or renting makes good sense for your situation.
0 votes
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