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Old 10-22-2012, 12:44 AM
 
Location: Northern Nevada
8,545 posts, read 9,031,948 times
Reputation: 3059

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We own a 6 year old home in the Mission Lakes area of Desert Hot Springs..It's a nice area close to Palm Springs..Hubby and I are trying to decide whether we should sell the home we have owned for 4 years, or lease it out for a year or two..The market is coming 'back' slowly..There are advantages and problems with both. We are wanting to move back to our beloved Washington State I am at the point of not being able to physically manage the hot summers any longer..we would like to sell it ourselves wthout an agent, we've done this before and the escrow company can basically do the paperwork for us if we found a buyer..Just trying to make some decisions so we can get moving with this after the first of the year. I know there are advantages to owning a rental, tax wise, but if we get tenants in who decides to not pay us rent, then it is up to us to continue to make the mortgage payments regardless, and that will be ok for a couple months..but not long term...

Any suggestions appreciated!
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Old 10-22-2012, 06:25 AM
 
Location: The Triad (NC)
26,231 posts, read 56,538,193 times
Reputation: 28187
Quote:
Originally Posted by dogmom View Post
...trying to decide whether we should sell the home we have owned for 4 years,
or lease it out for a year or two...
If you *can* sell... do so.
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Old 10-22-2012, 06:31 AM
 
Location: Cary, NC
31,077 posts, read 54,374,528 times
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Quote:
Originally Posted by MrRational View Post
If you *can* sell... do so.
I agree.
Being a landlord from several hundred miles away if you can avoid it is a mistake.
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Old 10-22-2012, 06:55 AM
 
3,576 posts, read 5,846,537 times
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A couple of points for the OP to consider before we get to this: "sell it, don't be a long distance landlord quick answer"

OP purchased home in 2008 (Some California cities did not tank until early 2008). So OP may be looking at anywhere between a 20-40% decrease in home value from the time they purchased their home in 2008.

Can OP afford to sell the home? Or how much with OP end up losing? Because OP already mentioned using a FSBO to try to save some money.

How much can home rent out vs. mortgage payments?

What is the target rental price? I've been a long distance landlord. Rented out myself with no management company. Townhouse was only 3 years old so I knew very little maintenance issues. My townhouse rented out for almost $3000 easily. In my opinion, once you start hitting the $3000 and up rental price range, you start dealing with different rental clients compared to homes being rented out for less than $1500 or so. (that's just my opinion). They tend to be more affluent, previous homeowners who will take care of your home.

How old is the home the OP is considering renting out? It it's built in 2008, it shouldn't have many maintenance issues if tenants lived there.
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Old 10-22-2012, 06:59 AM
 
Location: Cary, NC
31,077 posts, read 54,374,528 times
Reputation: 29572
Quote:
Originally Posted by aneftp View Post
A couple of points for the OP to consider before we get to this: "sell it, don't be a long distance landlord quick answer"

OP purchased home in 2008 (Some California cities did not tank until early 2008). So OP may be looking at anywhere between a 20-40% decrease in home value from the time they purchased their home in 2008.

Can OP afford to sell the home? Or how much with OP end up losing? Because OP already mentioned using a FSBO to try to save some money.

How much can home rent out vs. mortgage payments?

What is the target rental price? I've been a long distance landlord. Rented out myself with no management company. Townhouse was only 3 years old so I knew very little maintenance issues. My townhouse rented out for almost $3000 easily. In my opinion, once you start hitting the $3000 and up rental price range, you start dealing with different rental clients compared to homes being rented out for less than $1500 or so. (that's just my opinion). They tend to be more affluent, previous homeowners who will take care of your home.

How old is the home the OP is considering renting out? It it's built in 2008, it shouldn't have many maintenance issues if tenants lived there.
All sensible points.
I would add, though, the OP mentioned that a couple of months without rent would impose a significant burden. Of course the OP may not be able to afford a significant haircut on value, and I would leave that for the OP to confirm. But if a couple of months without revenue would be stressful, it may well be that taking a loss, if OP can swing it, would be more palatable than landlording.
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Old 10-22-2012, 07:12 AM
 
Location: Pennsylvania
15,380 posts, read 9,359,855 times
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also, can you find someone to manage it as a rental? I live about 40 miles from mine and have some one else handle it. She takes 10% (tax deductible) but she advertises, shows and screen tenants. They also call her with problems; little ones she fixes; big ones she calls me. But I prefer to not deal with that hassle.

If you could feel comfortable with that relationship and the distance, you might consider renting.

Not sure of your age but rent income doesn't count when figuring SS income. Meaning if you take SS before 66 and can't earn more than 14,600( a bit more-I forget the exact figure) before they deduct some from your SS payment, rental income doesn't count towards the 14,600+.
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Old 10-22-2012, 07:17 AM
 
35,121 posts, read 37,003,045 times
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I would sell since you are moving out of state, being a landlord that far away is in my opinion quite a pain and not cost effective. Good luck with your sale and move.
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Old 10-22-2012, 09:58 AM
 
6,345 posts, read 7,124,313 times
Reputation: 10752
Being a landlord can be a real headache. If you're going to manage it yourself, and you live far away, that can increase the headache level.

If you're just hoping that the market value of your house will increase in two years, there's no guarantee that it will do so. Plus, if you sell and recoup some cash, there could easily be better investments you could make with the money--even if it's just in buying another house. If you happen to take a loss, at least you won't have to worry about it any longer.
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Old 10-22-2012, 10:14 AM
jw2
 
2,028 posts, read 2,439,943 times
Reputation: 3340
I am not going to answer the question as there are too many variables. Also, responders tend to put their own bias in the answers. However, I will ask you a question that may answer your question

While living in your beloved state of Washington, would you buy this home in Desert Hot Springs for the amount you can clear after a sale?
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Old 10-23-2012, 11:30 PM
 
Location: Northern Nevada
8,545 posts, read 9,031,948 times
Reputation: 3059
Thank you for all your replies..husband and I have decided to just sell the home..we took a decent hit on the value after we bought but values have increased to about what we paid..so we would take a loss considering a few upgrades and landscaping. It's not enough of a hit to make us stick around and wait for the market to rebound and no guarantee we won't take another hit in a year or two and then really be stuck..we have a low mortgage, and so our equity has remained level, in fact paid down a bit..

I agree managing a home from long distance is NOT a headache we need..if we were flush with cash and had a sizable bankroll to float us through the times it is not rented, maybe. But we don't..and if we paid a management company to take care of things, with the rent we could get and management fees, we would be lucky to break even..and that is not worth the headache..

Heading up to Washington after the holidays to make a final decision, hubby today told me he can't wait to sell and get back 'home' to WA...so that is my answer.

Thank you all for taking the time to answer my 'what if's..I have found City Data to be so helpful as I have been a member for about 6 years and have also been lucky to find some awesome friends. Have a great night..
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