Author Topic: Case Study: Blessing in Disguise OR Curse from Hell?  (Read 2668 times)

Neurogeek

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Case Study: Blessing in Disguise OR Curse from Hell?
« on: October 29, 2014, 10:30:47 AM »
Would love people's input on this house I'm stuck with. I had to move from NYS to AL for work and have been trying to sell my house in NY since Nov 2011. In fall 2011 some hurricane came through and the river flooded and filled the basement with river water just as we were about to put it on the market. It did not affect the structure or the living space of the house. However, I think buyers are still freaked out by the flooding and I don't blame them but its a great house for little money. It didnt sell for over a year. So we rented it out in the winter of 2012 and the tenant was a disaster and we had to sink about $5000 in repairs. Last year we re-rented it while it was back on the market again. No bites. Everyone who comes through loves the house but runs away when we have to reveal the basement was flooded (You are required by law to report this until 5 years have passed). I'm just wondering if we should think about short selling and get it off our plates or if we should invest in it in the long run. The property is close to a university, in a family-friendly area of town, across from a local park. It has a new roof, new siding, new paint, new floors, new furnace, etc. Pretty much no maintenance for us.

Market Value: unsure.. probably about 70000-80000
Original Purchase price: 85000
Original Mortgage Amount: 83500
Interest Rate: 6.5%
Mortgage Term: 30 yr
Term remaining: 24 years
Amount remaining on mortgage: 67900
Gross Rents: 900
Principal and Interest (the P&I of your PITI - should match with the above info): 223.08
Taxes and Insurance (the T&I of your PITI): 155.30
HOA costs: 0
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.): We pay water/sewer/trash about 220.00 every 3 months, flood insurance about 200 per year.

mooreprop

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Re: Case Study: Blessing in Disguise OR Curse from Hell?
« Reply #1 on: October 29, 2014, 10:43:30 AM »
Personally, I would keep renting it until the 5 years have passed, then sell it.

jnc

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Re: Case Study: Blessing in Disguise OR Curse from Hell?
« Reply #2 on: October 29, 2014, 07:18:26 PM »
Have you tried refinancing it and have been unable to?
That 6.5% interest rate is no fun.

waltworks

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Re: Case Study: Blessing in Disguise OR Curse from Hell?
« Reply #3 on: October 30, 2014, 12:06:44 AM »
Seems like a pretty worthwhile keeper as a rental to me. Assuming you have some oh-crap money to cover a major problem - hang onto it.

-W

Overseas Stache

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Re: Case Study: Blessing in Disguise OR Curse from Hell?
« Reply #4 on: October 30, 2014, 01:12:48 AM »
I think you might have a problem selling it for what you think it is worth because of the flooding issue, even after the 5 years have passed and you don't need to disclose the flooding. FEMA has redone the flood maps and how much flood insurance costs. Being that you already owned the property, it is my understanding that, you are grandfathered and that is why your flood insurance rates are low. However, someone looking to purchase the property would have to buy new flood insurance at the new rate which is very expensive. I looked into a investment property which I don't think will ever be sold because the flood insurance will be $7,500 even though the house is is valued at 100K. Now this all depends on what flood zone you are in but still the rates have gone way up for all flood zones.

So my advice would be to do some research on how to pick good tenants and just keep it as a rental.

escolegrove

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Re: Case Study: Blessing in Disguise OR Curse from Hell?
« Reply #5 on: October 31, 2014, 02:06:41 AM »
I wouldn't write off tenants just because of one bad experience. I manage 9 rentals, 5 that are mine personally and another 4 that are family and work full time. While we certainly have had interesting moments, they have been stress not financial in nature. The importance is a great lease and knowing how to handle tenants. We have had a family member who was an accidental landlord for 25 years. It has become another retirement basket over time. Also remember that you will have to pay to takes on any forgiven amount. A short sale hits your credit and it may or may not be approved!

Good luck