The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: bacdef on November 18, 2014, 01:20:23 PM
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Hello,
This is my first main post to the forum, after reading MMM and lurking for years. Exciting!
Onto the question:
BADW, the two cats, and I currently live in our paid off house, it's just over 1000 square feet, and we're pretty comfortable in it. I've been here for 5 years, and she just moved in a few years back. The cats arrived soon after.
Our issue is the neighborhood. Currently, about a third (that I can tell) are rentals. This seems to be increasing, and the house just next to ours has been vacant for almost a year as it sloughs through the foreclosure process. Sarcastic Yay!!
The neighbors themselves aren't bad, and we like the majority of them. Though we do seem to play renter roulette, we had a family? hive mind criminal cult? live across from us for a few years, and they definitely made things interesting, if not scary. Right now things are ok, but there is the ever present possibility that we will have a new batch of renters that drive things back towards scary. Some of the rentals have become federally subsidized, one of which was surrounded by the city's SWAT team last year, after the resident robbed some people and threatened to shoot everyone.
So that was nice.
Thanks to hail damage, we just got a new roof and garage door. My friend Rob, who contracted out the majority of the work( I know, I suck for not DIYing most of it-insert long hours at work excuse here-) is also the owner/operator of a real estate group, and does flips and remodels. We've have multiple friends buy and sell houses from Rob, and they have been extremely happy with him. After he inspected the house, Rob highly recommended we put the house on the market this spring, as the increasing amount of rentals in the neighborhood will make it more difficult to sell and drive down the houses value as time goes by.
We are mostly onboard with this idea of selling this spring, we do like the house for the current population of 2 humans and 2 felines; but we'd like to add another 1-2 humans within the next 2-4 years, and a tad bit more space(+400-500sq. ft.) in a stabler neighborhood would be preferable for this.
While I trust Rob, as a natural paranoid I always like to verify. Is selling the house this spring a good idea? Before Rob talked to us, we had originally planned to wait another 1-2 years before putting it on the market, but now we're worried about losing value and having a hard time selling if we wait that long.
More requisite details on the house: Bought it for 95K, it's worth maybe 104K now. HOA is $290 a year. House sits in a vinyl village built in the late 90's, with our house being the smallest floor plan, others ranging up to 2500 sq. ft.
As I'm sure the recommendation may come up, both BADW and I are opposed to renting this house out instead of selling it. After talking it over, the prospect of running a rental stresses us out too much, and we prefer to stick with passive investing. Also, if we sell the house for a bit less than what I bought it for, we should still be able to buy the next house with cash or financing maybe 20-30K. I know, there are disadvantages to not financing the majority of the house and investing the cash, but this again is a comfort issue for us as both are careers are somewhat fluid.
Any advice would be greatly appreciated. Sorry about the long winded first post.
Thanks!
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You are being pressured by a "friend" who is looking for a market for his flips. He is playing off your fears about the neighborhood to get you to sell and buy. In your shoes, I would ignore the pressure and decide for myself if I wanted to continue to live in the current neighborhood. If I decided it was time to move, I would research the options without consulting your friend. Work with a lender to figure out how much you can afford to spend comfortably. I would also talk to several real estate agents that work in your area to get their opinions about the current market value of your house. If you find an area you like and can reasonably afford, find a buyer's agent and look at some properties.
Once you have done all that, you can certainly look at what your friend has to offer. Just don't get caught in a situation where he offers to buy your house at a below market value and sell you his flip at top dollar to "smooth the transition."