Invstmnt Property Advice needed - sell or rent??? (Dallas, Early: for sale, real estate) - Texas (TX) - City-Data Forum

KC Landlord · 10-15-2010, 12:41 PM

My wife and I married a couple years ago and weren't able to sell our house in the "M Streets" so have rented it for the past few years at a significant loss per month. I don't desire to have investment property in Dallas when my wife and I live here in Kansas City but the prospect of losing a bunch of money on the sale of the house doesn't turn me on either. Our current tenets move out in November so we're forced into another decision...try to rent it again or sell it.

We've had two real estate agents look at the house and have given us sale price estimates that are 20% off from each other. The worst prospect had us losing $40-$50k if we sold. The house is in good repair but needs some updates to compete at the same price level with a lot of the houses in the area.

My other option is to stick it out for the long term by paying off the second mortgage on the house for $40k which would get us over 20% equity and allow us to refinance the primary mortgage which currently at 8.5%. Doing this and assuming a 2% appreciation of the house would (I believe) get us close to breaking even each year.

1.) Any advice on my two options from experienced rental property owners? Do I take my big loss now or throw the same money into the house which will allow us to refi and do this long term?

2.) How do I get an accurate estimate of what my home might sell for since my real estate agents are all over the board? I don't want to sell super-low (if I do sell) but I don't want to price high and pay for months of the mortgage with the house unoccupied only to take a loss later.

3.) Dallas property taxes are killing us. I don't believe we qualify for the homestead exemption but are there any other options? Re-appraisal?

Thanks!

KC Landlord

Squirl · 10-15-2010, 01:08 PM

I think you should talk to a tax specialist/CPA to help you properly assess your options and also engage one of the many companies that offer to challenge your tax appraisal and they take a cut of the savings. I don't mind renting out my properties but I am local.

nsumner · 10-15-2010, 01:11 PM

Pay for an appraisal. It would cost you about $350. Are these Realtors familiar with the M-streets? 20% is a pretty big spread.

I see refinancing in your future.

Naima

KC Landlord · 10-15-2010, 02:24 PM

Good thought on the appraisal. The realtor who gave me the lower of the two estimates on price IS familiar with the M-Streets so the bad news he gave us is probably closer to the truth than the more optimistic realtor...still trying to decide whether to just take the hit and be done with the thing or to hold on for 3-5 years while nearly breaking even on renting it and hope it appreciates.
Any prognosticators out there?

Lakewooder · 10-15-2010, 02:27 PM

The holidays are the worst time to put a home on the market.

loves2read · 10-15-2010, 03:22 PM

While to me it seems viable to pay off the second mortgage and refinance-unless you can be sure of getting more with that 40K invested in the stock market--you would be saving money by not having to pay that second morgage that is probably at a high interest rate--and then refinancing at lower interest rate

talking to a CPA Tax professional would give you some insight into running this house as a business proposition that you might not know of now...

and while I know that trying to sell a home during holidays is worst time--I think the uncertainty over what is happening with the foreclosure market and IF the MERs' situation has tainted OTHER types of mortgages will put uncertainty into the housing market for the near and possible far future...

momof2dfw · 10-15-2010, 03:23 PM

8.5% interest

. When did you take out that loan? No need to answer that one

. Just, WOW!!! For the last several years interest rates have been very low and I know hindsight is always a better picture but you should have refi'd several years ago. I'd refi that in a heartbeat. You would save money right there and it could become more of a profit when you do sell.

Get an appraisal and then use that appraisal to go fight your property taxes in May next spring. Only thing is the DCAD may want a more current appraisal than one done 6 months prior. If you refi then you will be getting an appraisal so do not go out and pay for one right now if you are going to refi in the next month or two. No need paying for two appraisals. Only if the bank you refi w/ will take the apprasial you get done now would that be beneficial. Some will not and some will.

No need to keep paying high property taxes if your appraisal is less than the DCAD has it set at. Go fight that. Take some comps as well when you go and your new appraisal. They can not really fight back against an appraisal that is current. If the property is not your primary residence you can not get the homestead exemption. GO EARLY to protest your property taxes. Go the first week that you can and it won't take as long. This also gives you more time to go back again if you do not get the results you want the first time. You can go back every single day and protest them if you want. Get it taken care of in the informal review. You do NOT want to go before the appraisal review board AT ALL!

Good luck

loves2read · 10-15-2010, 03:31 PM

will you lose money if you pay off the second mortgage with the 40K and refinance--
are you worried that much about the appraisal value?

wagsone · 10-15-2010, 04:10 PM

I would talk to a mortgage broker before I went the "throwing money in the deal" route. While a refi would definitely be beneficial from a cash flow standpoint , if you currently own a home in KC, the Dallas residence is now a second home and subject to much stricter underwriting guidelines, as well as a higher rate (still less than where you are though).

We live out of state and have a place in Uptown as well and yes, the taxes are a killer. We appealed a couple of times this year based on lower sales in our complex and were successful, but even with the lowered value, not being qualified for the homeowners exemption keeps them up there! We are looking at refi right now and have considerable more than the 20% equity and we are finding it is not going to be easy as it is a 2nd home in the current market.

nsumner · 10-15-2010, 04:16 PM

The M-streets are a very desirable area. I would refinance and rent it on a yearly basis. Now since this is October, I would do an 18 month lease so the lease would be up in spring to give you the option of selling it the summer. I'm sure you would find a tenant that is willing to commit to 18 months.

You could also put it on the market for lease and for sale and see what bites first.

Naima