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Message
Renting out house with mortgage
Posted on 1/17/19 at 5:48 am
Posted on 1/17/19 at 5:48 am
What are the boards thoughts on this? Risky?
We looked to move earlier last year and weren't getting looks on our house at the price we were comfortable selling (even though multiple realtors valued it at or higher than we bought). Market is apparently a bit lower than when we bought, plus they are building a brand new section of our neighborhood, so lots of competition. We dont need to move for another 1.5 years (school district thing), so we took the house off the market after 4 weeks instead of dropping the selling price too soon.
We already have enough for another house downpayment and will have that plus a safety net saved up by the time we "need" to move. Im tossing the idea around of keeping this current house as a rental, but we'd still have a mortgage. I could still cover the mortgage if the house sat unoccupied, but it wouldn't be comfortable.
Everyone I know with rental properties usually have lower value properties they own outright. So a little less cash flow risk.
I think its be decently easy to rent. But I have no expertise. There are several rentals close to me (300-450k homes in the 2500-3250 sqft range). Its another reason we want to move to be honest. Too much turnover. I still have to evaluate whether its financially worth it from a rental price vs mortgage (realizing homestead and insurance will go up). Just more concerned about listing while still owing on the house.
We looked to move earlier last year and weren't getting looks on our house at the price we were comfortable selling (even though multiple realtors valued it at or higher than we bought). Market is apparently a bit lower than when we bought, plus they are building a brand new section of our neighborhood, so lots of competition. We dont need to move for another 1.5 years (school district thing), so we took the house off the market after 4 weeks instead of dropping the selling price too soon.
We already have enough for another house downpayment and will have that plus a safety net saved up by the time we "need" to move. Im tossing the idea around of keeping this current house as a rental, but we'd still have a mortgage. I could still cover the mortgage if the house sat unoccupied, but it wouldn't be comfortable.
Everyone I know with rental properties usually have lower value properties they own outright. So a little less cash flow risk.
I think its be decently easy to rent. But I have no expertise. There are several rentals close to me (300-450k homes in the 2500-3250 sqft range). Its another reason we want to move to be honest. Too much turnover. I still have to evaluate whether its financially worth it from a rental price vs mortgage (realizing homestead and insurance will go up). Just more concerned about listing while still owing on the house.
9
Posted on 1/17/19 at 5:56 am to KG6
you have over a year to sell it. Take it off the market, fix it up to showroom condition and list it competitively.
you've only been trying to sell it for 4 weeks - what feedback have you gotten from showings? You cant price it at new retail if your competing with brand new homes in the same neighborhood unless you offer something those homes don't.
I would not consider renting it from what you posted.
you've only been trying to sell it for 4 weeks - what feedback have you gotten from showings? You cant price it at new retail if your competing with brand new homes in the same neighborhood unless you offer something those homes don't.
I would not consider renting it from what you posted.
Posted on 1/17/19 at 6:52 am to Chris4x4gill2
Yea, a lot of headaches for very little payoff.
Posted on 1/17/19 at 7:17 am to KG6
Don’t do it OP, just sell. I’m a property manager with numerous rentals I own both with mortgages and without.
Your numbers won’t make sense, it’s all a % game. That’s great if you will cash flow $200 on a $1800 mortgage, but then your AC goes out and it costs $1200 to fix and before you know it you are cash flow negative with a questionably good tenant locked in for 9 more months and you wish you would have sold.
Better not to mix the two unless you HAVE to. J
Your numbers won’t make sense, it’s all a % game. That’s great if you will cash flow $200 on a $1800 mortgage, but then your AC goes out and it costs $1200 to fix and before you know it you are cash flow negative with a questionably good tenant locked in for 9 more months and you wish you would have sold.
Better not to mix the two unless you HAVE to. J
Posted on 1/17/19 at 7:57 am to Chris4x4gill2
4 weeks on market, 1 showing after dropping price by 10k. Which was really surprising. We thought wed have trouble with pricing, but we thought wed get views. Newer house and everyone involved felt it showed well. We didn't want to have it with a blemish of high days on the market, so with the little interest we pulled it off and figured wed try later.
The one showing said there was no "wow factor" which is a strange comment for a 300k middle class home. Think it was just there go to "not interested" comment. Not much we can do about that.
The one showing said there was no "wow factor" which is a strange comment for a 300k middle class home. Think it was just there go to "not interested" comment. Not much we can do about that.
Posted on 1/17/19 at 8:08 am to KG6
Why would someone want to rent a 450k house? If you can afford the rent in a house like that, you can probably afford to buy it too
Posted on 1/17/19 at 8:16 am to Upperdecker
quote:
Why would someone want to rent a 450k house? If you can afford the rent in a house like that, you can probably afford to buy it too
I'd never do it, but lots do. Short term work, spending a year in an area to get to know it before purchasing. Poor financial decisions. People do it.
Posted on 1/17/19 at 8:25 am to KG6
Housing market is going down and going to continue to do so, in my opinion. I'd get rid of it as fast as possible for a price that's reasonable if I were you.
I'm not saying put it way below what you want to list it for, but you may be losing money everyday anyway
I'm not saying put it way below what you want to list it for, but you may be losing money everyday anyway
Posted on 1/17/19 at 8:42 am to KG6
quote:
weeks on market, 1 showing after dropping price by 10k. Which was really surprising. We thought wed have trouble with pricing, but we thought wed get views. Newer house and everyone involved felt it showed wel
This makes no sense and your realtor is an idiot, fire them.
Price it right. No one enjoys bargaining and no one has the time to look at over priced inventory and houses that are out of their price range.
I’ll also give you a tip, people that over price to start out their listing are usually PITA to deal with and are not interested in bargaining. That’s as a percentage.
If I’m looking to spend $425 on a house I’m looking at houses in the $430 and below range. Not $450 hoping to get a great deal on a brand new listing, that doesn’t happen.
Plus it’s a slow time for real estate, the spring and early summer are best times to sell.
So you listed at the slowest time of the year and you over priced. It’s not very surprising you didn’t get viewings.
This post was edited on 1/17/19 at 8:43 am
Posted on 1/17/19 at 8:52 am to KG6
Did you have it listed with a realtor? Or were you trying to sell yourself?
Posted on 1/17/19 at 9:05 am to baldona
I admit the house was overpriced, but you have it pretty much all wrong.
The house was listed in the summer. We took it off in August when we realized the market slowed after school let in.
The house was listed at the price we purchased. Separate real estate agents found comps at our price or higher. We obviously realize it was overpriced now. We didn't want to go below a certain point since we don't "need" to sell. That's where we are now. Do I want to do this again in a year, or just rent the thing?
After 2 weeks, we dropped from 305 to 295 (never said our house was 450, the range of our hood is 300-450). 290 was our floor. 2 more weeks and we only had one view. When the realtor said lets go 289, we said we'd rather wait a year and see what the market does. No reason to let it gather days on market. There's no doubt being on the market for 60 days makes the house look bad.
If we decide not to rent and sell, we may be willing to take the bigger financial hit next year. Just didn't need to now. And we saw no reason to hang out for the unlikely chance we'd sell at a price we were willing to.
The house was listed in the summer. We took it off in August when we realized the market slowed after school let in.
The house was listed at the price we purchased. Separate real estate agents found comps at our price or higher. We obviously realize it was overpriced now. We didn't want to go below a certain point since we don't "need" to sell. That's where we are now. Do I want to do this again in a year, or just rent the thing?
After 2 weeks, we dropped from 305 to 295 (never said our house was 450, the range of our hood is 300-450). 290 was our floor. 2 more weeks and we only had one view. When the realtor said lets go 289, we said we'd rather wait a year and see what the market does. No reason to let it gather days on market. There's no doubt being on the market for 60 days makes the house look bad.
If we decide not to rent and sell, we may be willing to take the bigger financial hit next year. Just didn't need to now. And we saw no reason to hang out for the unlikely chance we'd sell at a price we were willing to.
This post was edited on 1/17/19 at 9:08 am
Posted on 1/17/19 at 11:17 am to KG6
Sorry I just typed and submitted it came out a little harsh.
Your realtor should have offered comparable recent sales, do you view them? What were they?
Also, you need to be honest with yourself about things like the layout and the location.
Houses on a golf course are going to sell more than the houses across the street with nothing but neighbors behind them for example.
I don't know where I got $425-450 from that was just an example. $300k is questionable price point to rent. But I would consider that I think the housing market is peaking right now. A lot of places have seemed to stabilized including Nashville, inventory is starting to sit. So if you rent it for 2 years, I don't think its a guarantee the market will be better then.
Your realtor should have offered comparable recent sales, do you view them? What were they?
Also, you need to be honest with yourself about things like the layout and the location.
Houses on a golf course are going to sell more than the houses across the street with nothing but neighbors behind them for example.
I don't know where I got $425-450 from that was just an example. $300k is questionable price point to rent. But I would consider that I think the housing market is peaking right now. A lot of places have seemed to stabilized including Nashville, inventory is starting to sit. So if you rent it for 2 years, I don't think its a guarantee the market will be better then.
Posted on 1/17/19 at 11:41 am to baldona
I know for a fact, North Dallas is starting to face issues with built McMansion neighborhoods sitting empty.
A few houses I have kept eye on have dropped 20k over the past 3 months. If the interest rate rises again, might see more McMansions empty.
A few houses I have kept eye on have dropped 20k over the past 3 months. If the interest rate rises again, might see more McMansions empty.
Posted on 1/17/19 at 2:14 pm to 50_Tiger
quote:
I know for a fact, North Dallas is starting to face issues with built McMansion neighborhoods sitting empty.
A few houses I have kept eye on have dropped 20k over the past 3 months. If the interest rate rises again, might see more McMansions empty.
Yep. I think building will continue but people just started to get stupid with their listing prices. Builders got stupid with how much they were charging, etc.
OP I'm not saying the market will be down in 2 years, I'm just not convinced its going to be up much more.
Posted on 1/17/19 at 2:17 pm to baldona
quote:
OP I'm not saying the market will be down in 2 years, I'm just not convinced its going to be up much more.
Best case in my opinion is it'll be pretty flat, although I think it'll be down as law of supply and demand has been pretty out of whack the last three or so years.
With that said, let's say it holds pretty steady, time value of money at 300k for 2 years is a pretty material chunk of change.
Posted on 1/17/19 at 2:54 pm to Mingo Was His NameO
quote:
With that said, let's say it holds pretty steady, time value of money at 300k for 2 years is a pretty material chunk of change.
Certainly. I will point out he will have his mortgage paid for so he will make some money there.
Posted on 1/17/19 at 6:04 pm to KG6
Do you live in an area with a lot of military personnel? They're good families to rent to and won't wreck your shite
Posted on 1/17/19 at 6:55 pm to Powerman
No, market is The Woodlands. I dont know why, but there is a rental market even up to 500+k homes. I dont know exactly what the rents are, so I do have to research of it's worth it. Im just evaluating options. Not even leaning that way yet. Would just be nice to have the option.
This post was edited on 1/17/19 at 6:57 pm
Posted on 1/17/19 at 7:09 pm to KG6
I find that the houses in that price range are harder to rent long term. People that rent your house can afford to buy, they are just there temporarily. Not as good as a renting starting out houses. Be careful, there. You said there is a rental market, but delve into it. Might be consultants for a nearby company there for 6 mos to one year.
Posted on 1/17/19 at 9:23 pm to KG6
I just looked and couldn't find it but there's a biggerpockets podcast with a dude that only does like 400k plus houses in Dallas. Guy was making a killing doing it too. But if you wanted to be in the rental business, it's not the easiest place to start. I wouldn't worry about being leveraged if you do it correctly. I'd much rather have a 3 unit or something similar that can still bring income even if you have one vacancy.
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