The Money Mustache Community

Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Mr Mark on May 10, 2013, 09:01:59 AM

Title: to sell or wait, and best return for updates?
Post by: Mr Mark on May 10, 2013, 09:01:59 AM
We bought our house a few years ago at a great time - late 2010, in a good area of Houston. The place has hardly seen the recession, and we caught the dip. The person we bought from had to bring 30k to close. Ouch.

But now, the city is booming, and our neighbourhood is white hot. Inventory down to less than a month. Houses are closing within days of list, with bidding wars appearing and sale price well above asking in a few cases.

Our house is one of the original 1930s, as we are slowly surrounded by Mcmansions. [Edit. People are buying 5000sqft lots for 450k and building 3500sqft 700k houses on them, btw. Amazing. This is why I'm thinking of selling now...]

We got the place for less than lot value, and the questions are:
1. Sell? We will be moving in around a year, guaranteed. We could quickly tart it up and put in on the market for high estimate, see what happens. If it sells, take our profit and lease for a year.

2. What renovations to do? I've got our realtor coming by this afternoon to discuss what we could do vs impact on price. If we leave it as is, price would be around 470k. A full remodel, with new kitchen, bathrooms, landscaping, porch, etc would take it to max 650k.  I'm thinking somewhere in the middle, maybe countertops, tile floor and doors in the kitchen. Guest bath is bad, so will need to do that anyhow. Sand and repaint door frames really well.

We will be selling either way, so probably the remodeling will be happening anyway to some extent. I don't want the house to be a scrape off.

Title: Re: to sell or wait, and best return for updates?
Post by: Johnny Aloha on May 10, 2013, 03:16:33 PM
Good position to be in - congrats!

To me this is all about market timing.  Are you confident the inventory will stay low and competition stay high?  Do you think interest rates will stay low, providing incentive for people to buy?  If so, it makes sense to hold for another year.  If not, you might want to sell now.

Make sure you are comfortable with your decision (either way) and don't look back.

I'm not familiar with your market but my market is similar, and I'm having the same thoughts. 

I would start working on the cosmetic improvements now.  Just don't overspend for the neighborhood (sounds like that would be hard!). 

A wise man once told me something about market timing: "bulls graze, pigs get slaughtered"

Title: Re: to sell or wait, and best return for updates?
Post by: Mr Mark on May 10, 2013, 04:08:17 PM
So, our realtor friends advice was:

Yes to all superficial cheap stuff, fix cracks in dry wall, repaint, professional clean, etc etc. Repaint coffee cream.

Kitchen: New countertops (granite)  and range to match the other new appliances and naturally stainless steel. Don't retile floor, just a damn good clean. Some new cupboards, with doors to replace some old open shelving.

Bathroom. New integrated cabinet sink unit, resurface tub and new faucets etc. Retile bath surround. Some extra shelving. Again, leave floor, just clean.

New front and back doors and frames, and don't be cheap. Small awning over front door. Basic tidyup landscaping and lots of nice fresh mulch. Lots of pruning. Powerwash paving and fencing. 'Think immaculate.'

But, that's it. Agreed a full remodel too risky. Estimate around 10k. Might put a new roof on for 5k, as this one is beyond typical age limit and a new set of shingles will look great.

Then they think around 525 to 550. Sweet. Sure beats my stock market equity ROI.

I guess I know what i'm doing over the summer!