The House in Question
Well, we met with our real estate agent and the news wasn’t very good. She thought we could sell it for about $10,000 to 20,000 less than we paid for it. If we finished the basement she thought we could sell it for about what we bought it for. We estimate it needs about $5,000 to finish the basement. (The basement already has a finished bathroom and bedroom and is fully framed and wired.)
So…I think we are going to rent it out again for at least a year in which time we can slowly finish the basement and keep contributing equity to the outstanding mortgage. By this time next year we will have another $6,000 paid toward the house that doesn’t come from our pockets (hopefully that means equity). So even if we spend the $5000 to finish it we’ll come out ahead and we’d be able to either charge more in rent or sell it for more.
It’s not ideal, but for the timing of this (being right before we buy the place in Puerto Rico), I think it will have to be. We don’t want to have to shell out such a large sum in PR and have an empty rental that we are paying for and waiting to sell for a low amount on top of paying back the short term personal loans we got to buy the Rincon property.
We are ok with this. If our current tenant had wanted to stay we wouldn’t even be having this conversation and we’d let sleeping dogs lie. We thought if it played out right that this would be a good time to walk away and sell, but it just isn’t quite yet. So, that’s the plan, for now anyway. We hope to start showing it to prospective tenants this upcoming week and get them signed on the same week our current tenant moves out.
The realestate agent must have given you hopes that the market wouldn’t deteriorate further over the next year. That would be good news. It’s a nice looking house. Hope you get a new tenant quickly.
Wil
There are hopes of things picking up. There have been quite a few jobs created in the city just recently with a cheese factory being setup. That boosted the dairy industry as well.
It’s hard to say what will happen. Ever. However the rental market seems to be good, so that’s what we will go with for now.
Sounds like you made the right decision(s)again. You are right; this is a good if not great rental market. A lot depends on your local economy, but the the economic downturn has sent millions of people into rentals in the last 5 years and millions more are headed there in the next 5, as the 2003 – 2008 “no qual” mortgages begin the 5 year reset process this summer . Unfortunately folks are forced out of underwater (20% currently) or behind payment (5%) mortgages which are going to go up at reset.
We do not think housing prices will head up for several more years, with some exceptions in hot economies. For Rocky Mountain states, prices have stabilized at the 2000 – 2003 price levels. It is a good time to be financially conservative until all this settles out. Adding value through the basement upgrade may help you increase the rent to cover Mr. Alligator. It will help you draw more tenants, and eventually more buyers. Since Britton is so capable of doing the work, it is a reasonable investment.