Should we rent instead of selling our 4bedroom 2 bath cape cod due to the market being so bad right now?

Asked by Glo, 60629 Sun Jul 12, 2009

We need to move to Berwyn. There are good buying opportunities. Should we sell below market value or just rent the house out?

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10
Steve Smither, , Palatine, IL
Sun Jul 12, 2009
There is one more factor as a lender that you should be aware of.
If your loan to value (how much you owe compared to what the value is) over70% your whole payment will count against your debt to income for qualifying for the loan.(75% for an FHA loan)
So it probably would be beneficial to get pre-approved to make sure that you can qualify if you rent the property out. I can do this for you pretty quick if this would be helpful.
That way you will be able to make a more informed decision...
Thank you
Steve Smither
Ardain Mortgage
ssmither@ardain.com
847-942-5151
1 vote
Maybride, , New Jersey
Sun Jul 12, 2009
I'm not a broker but just wanted to offer some friendly advice since I own and also rent out a home.

Re renting-- I think aside from market conditions you need to ask yourself if you are ready to be a landlord. There is a lot that goes to being a landlord, such as finding good tenants and being available whenever they need repairs, etc. Sometimes finding tenants with a good credit history may be harder than finding a buyer. Also, you should realize that its possible that you may not find a renter right away. With today's economy and some people's bad credit, its possible you may not find a renter for months leading you to pay two mortgages (again, I'm not a broker so I don't know your township's specific statistics).

Re selling-- how much below market value are you selling? If its a few thousand then maybe you can withstand the loss, but if its 20-30k or more then I think you'll need to do some serious soul searching. If you really just need to move right away, it may be wise to unload your property, eat up the loss and get that good buying opportunity. Important thing though is if you do sell at a loss, don't look back and wonder why you did that. Let it be water under bridge and enjoy your new home.
1 vote
Sarah Leonard, Agent, Schaumburg, IL
Mon Dec 15, 2014
Consider the current value of your home compared to what you still owe on it. If you owe more than the home is worth, it might make sense to rent for a few years. You just need to ask yourself ~ are you comfortable being a landlord?

Good luck!
0 votes
Goran Utvic, Agent, Chicago, IL
Mon Dec 15, 2014
Depends on when you purchased it and what you paid for it. You can get a good answer as to how much your Chicago home can sell for at http://chicago.freehousevalues.com/
0 votes
Sue O'Kane, Agent, Arlington Heights, IL
Fri Dec 12, 2014
Who told you the market is bad right now? From what I have been reading, the market has been improving steadily for the last year or two. Even though the fall and winter market is slow, the most serious buyers are looking. Do you know what the rent goes for in your area? If rent covers your mortgage payment, it's definitely something you should consider. But with renting, comes tenant issues and property problems that you may not want to tackle. Your best bet would be to have an agent (like me) conduct a market analysis to determine the viability of selling vs. renting.
0 votes
Rose Wilkins…, , Edmond, OK
Wed Dec 3, 2014
Consider doing a lease with an option to buy, since you don't have a long term interest in being a landlord.

My company is a consulting firm that specializes in risk management. Have you considered:

- Malicious damage done to a property by a tenant?
- Potential frivolous lawsuits?
- Default of lease?

We work with a company that offers coverage for tenant default for up to 6 lease payments as well as 100% coverage in the other areas mentioned above.
Web Reference:  http://www.JVAmerica.com
0 votes
Santiago Ken…, Agent, Chicago, IL
Fri Aug 2, 2013
Hi there , you are in the same boat that a lot of people , but to be honest the market is not really bad now ...is not good either but will be very bad by the end of years if forecasts are right .
My recomendation is put it on the market and try it ...and if not happen rent .

I work in the Berwyn area a lot , bilingue in Berwyn is a must
Good luck
0 votes
Kipp Blackbu…, , Chicago, IL
Sun Jul 12, 2009
This is a difficult question to answer without more information. Generally however, if you can afford to buy another property without selling to one you currently own, it only makes sense to hold off and sell when the market improves. You will claim a higher price in a couple years. Its obviously a great time to buy. You need to run some numbers, and don't forget to take into consideration the tax advantages with respect to any "loses" on the rental property. If you decide to rent it, call me and I'll send you in the right direction.

Kipp Blackburn
(312) 730 3320
kippblackburn@atproperties.com
http://www.kippblackburn.com
0 votes
J R, , New York, NY
Sun Jul 12, 2009
As the first person said, first you have to ask if you want to be a landlord. I am selling a house now for someone who had a good tenant for a few years and is now selling because they're too nervous to put in another tenant. Afraid they'll get someone who isn't so good. I would add that they are selling now for about 100,000 less than they would have gotten had they sold back 2 and a half years ago. Depending on where the market is headed where you are you may want to sell now rather than sell for less later. The house you are buying is also selling for less. Will you be losing money or equity. I once heard someone say the only houses that matter are the first and last ones you buy, everything in the middle is just moving your equity from one to another.
0 votes
Bill Eckler, Agent, Venice, FL
Sun Jul 12, 2009
Glo,

In your case it may be beneficial to seek the best of both worlds.............. renting a home that you are trying to sell isn't normally advisable. However, in some cases sellers have found the perfect tenant. One that knows the home is for sale, one that doesn't mind keeping it presentable for showings, one that doesn't mind an occasional inconvenience etc.

In return for their kind understanding an willingness to work with you as the owner, it may be beneficial to offer them a rental discount. Sometimes the best individuals to deal with in this type of arrangement are personal acquaintances.

Best wishes,
The Eckler Team
0 votes
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