My wife and I bought a home foreclosed about 1.5 years ago. At the time we were thinking we would rent the home out after living in it for about a year (lets us qualify for a home owner occupied loan) and buy another house. For a number of reasons we decided not to do that. The area it is in is not all that great right now however there are a couple of things that make us think property values will go up in the near future. 1. There has been built a new Medical campus within 3 miles of the home. This has brought a great deal of new businesses to the area as well as many higher income people working in close proximity to the home. 2. There is a new light rail being built .25 miles away from our home. It will be finished in 2016 and will connect this area to the airport and to downtown.
We got the home for about $88k and could rent it right now for about $1,200 a month. This covers our mortgage, insurance and tax with about $550 left over. However our neighbor two doors down with the exact same house (but in better condition) went under contract for $155k (after being listed for $160k) a week after it was listed and sold with in the month. If we were to put about $10k into the home we could fix it up to equal or better than his home and only be about $100k (including the mortgage) into the home. If it sold for even $130k that seems like a pretty good return to us and would allow to purchase another home and have a even lower mortgage. (Assuming we purchase another foreclosed home.)
There are also 2 extra bedrooms that we could rent. We might even be able to cover our monthly expenses with just these two rooms. I am very picky about who I let into my home though because we have 3 little ones, and like I said the neighborhood is not all that great right now. Our one roommate moved out about 6 mo ago and we haven't found more since then.
What do the MMM readers think. Sell, or stay and continue to try to rent out the rooms.
