Claire had some nice advice below for you. Let me toss in my 5 cents worth.
Thank you for offering all the details and asking a great question.
Yes, the rental market is good. And I personally do property management and know the investor/rental market very well. I would not manage properties down in Minneapolis, so I am not wanting that business. Okay? But even though the rental market is good, and you do get extra benefits from renting (i.e. property tax deduction, interest deduction, depreciation, management fees, etc.), sometimes it is better to cut losses and run. But sometimes not.
Let's talk about your "friends". Remember Job in the Bible? He went through hell. Why? Because he listened to his friends and not someone much wiser who was trying to tell him what to do. No, I am not God and you are not Job. But I am an expert in this. The housing market is very healthy. We, in this area, were the first market to get into all those bad loans, and the first market OUT of the mess. We hit rock bottom over a year and a half ago. Last January the big annual report came in that we all wait for and the big national report stated that of all the top 100 real estate markets in the entire U.S., that the Twin Cities metro market was the number one healthiest market in the country. They also projected that in 2012 we would have a 8-10% increase in the average sales price. They were wrong, Cat.
In 2012 we had an average sales price across the board of just shy of 15%! Our experts are projecting something close again this year, but maybe closer to 10%. Over the past 50 years we have averaged around 5% (except for the previous 4 years of crap). So expect that next year, yes, your property will go up in value. Will it go down? Well, like you said, we donâ€™t have crystal balls. But I say hogwash! There is no way it is going to go down again. Real estate is very predictable and it will under normal circumstances always get better. The foreclosures and short sales are down about 40% across the board and everything is improving. My humble opinion is it will get much better.
Should you rent and sell later? Sure you can do that. But letâ€™s discuss that in simple fashion. I will make up figures to make a simple point. If you have a $50,000 home and the price increases 5%, it goes up $2500. If you have a more â€œnormalâ€ or average priced home of letâ€™s say $200,000, and it goes up 5%, it now goes up $10,000. I donâ€™t have time to walk you through a 5 year scenario, you can do the math. But the bottom line is that the $50,000 house may go up $10-12k, but the $200,000 home will go up $50,000. Remember the phrase â€œit takes money to make moneyâ€? It applies here. You get a higher ROI the higher the value on your basis. And you never stated the value of your home, so I cannot be exact here. But if you have a $50-60k home in Minneapolis (not a $900,000 home on Lake Harriet), you can wait 2-3 years, and try to get another $10k out of it. But if you took that $30,000 of yours out to Oregon, you will get a better return if that is added to the value of your home there. ON top of that, as a property manager, with all my experience, letâ€™s try to be real. How much are you going to have to pay a property manager each month? Not a lot, but it adds up. More important, what are the chances that at the end of the first yearâ€™s lease the tenants leave you with a gorgeous, spotless well-maintained homeâ€¦.in Minneapolis? Not. You will be replacing carpeting, appliances and re-finishing HW floors.
My humble opinion: get a good realtor and sell it now. Because right NOW we have a severe shortage of inventory. We are 40-50% lower on inventory than we should be. These inventory levels are down to 1999 levels. And already this year the buyer traffic is up about 35-40%. Combine these two together and here is what we have. I list a homeâ€¦..if it is priced according to the marketâ€¦.they scrambleâ€¦sometimes there are multiple offersâ€¦..and the seller usually gets what they are asking for and often more.
If you have any questions or want to chat, just click on my website below and give me a call.