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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: EXLIer on February 02, 2017, 06:59:10 AM

Title: Case Study: Sell or Rent our old house?
Post by: EXLIer on February 02, 2017, 06:59:10 AM
Bought our house in 2007.  Manufactured house on 30 acres.  These are tough sells given  the new requirements ( I think getting a mortgage on manufactured homes is tough).

I'd appreciate any and everyone's suggestions:

Market Value: Between $215-250k
Original Purchase price:$300k
Original Mortgage Amount: $240k
Interest Rate: 6.85%
Mortgage Term: 360
Term remaining: 243
Amount remaining on mortgage: ~$200k
Gross Rents: VACANT but I could get about $1,500/month
Principal and Interest : $1,540
Taxes and Insurance (the T&I of your PITI): $125/month

This area is a heavy agricultural area that is fueled by boom/bust cycles of extractive industries ( Oil & Gas ).  I tend to think that it has been slowly recovering and might increase even more so, but don't want to "guess" on that.

Just would like to get some suggestions as to whether we should cut our losses now and sell, hang on to it and hold firm on our asking price, or rent it and re-evaluate in a year or so.

Thank you.
Title: Re: Case Study: Sell or Rent our old house?
Post by: waltworks on February 02, 2017, 08:57:08 AM
Sell it.

-W
Title: Re: Case Study: Sell or Rent our old house?
Post by: Another Reader on February 02, 2017, 09:19:47 AM
Why would you hold firm on your asking price, hoping things might get better?  That makes your property a stale listing that no one will consider.  A vacant house is a magnet for thieves and vandals.  An unnoticed water leak could destroy the structure.  A freeze that gets the water lines will do the same.  Your insurance company might cancel you, especially since this is rural property.

Tenants in this type of property tend to be of lower quality, although that varies with location.  More risk to your property.  In your shoes, if I could afford to do so, I might sell this, eat the loss, and think twice about purchasing a similar property in the future.
Title: Re: Case Study: Sell or Rent our old house?
Post by: GoBigRed on February 02, 2017, 10:58:22 AM
 I would sell and move on.  Take whatever equity you can get.  If none, at least you can get out of the property.

If you wanted a cashflowing rental, you would have to look towards refinancing to significantly drop your PITI.  Not sure what the refi market is for a manufactured home with land.  However, on a $200K mortgage you are roughly looking at around $1100 (assuming 4% and your current T&I, which this is probably not a rate you will get on a manufactured house).  Plus you will most likely have closing costs with a refi.  Even then, it would not likely produce a ton of cashflow for you after factoring in repairs, rental tax and vacancy.  This could also affect your ability to get another mortgage on another property if you are intending to buy another house to live in.  A bank will not likely count the rental as income until it has seasoned, likely 6 or more months.