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My friend owns a house in a Dallas suburb. Its a paid off house, currently being rented out and managed by a property management company. Its coming back on market this month and causing a rift between the couple as they decide wether to cash on current market and sell or keep it as a rental property. Its probably a $400k house on rent at $3k with 10% going to the manager, expenses include property tax, insurance, upkeep and repairs.
I feeds to a good school district and looks like a nice family oriented area. What would you do if you were in their shoes?
Assuming the couple is divorcing, the best thing to do is sell it. Get on with their separate lives.
Assuming the couple is staying together and just arguing about this, the best thing to do would be to see a marriage counselor before they end up with the first scenario.
Assuming you want to stay friends, you should stay out of it.
I am staying out of it and apparently they are just trying to argue their way to right decision. If I were in their shoes, I would sell but want to hear how people find solution to these dilemmas. Is it worth holding on to a rental or selling makes sense to most people. What is your opinion or experience.
I wouldn't get involved with a $400,000 single family as a rental, at least long term. Especially in Texas cause that's probably gonna be a big house on a large lot requiring maintenance. I think high end homes generally have a limited appeal to renters too. IF they can afford $3000 a month, why not buy?
Last edited by GiantRutgersfan; 09-05-2013 at 10:37 PM..
In the long run that house will produce more than 400k. Selling paid off property with huge positive cash flow is financially dumb. Especially if it produces with minimal outlay.
3,000x12=36,000
36,000-10%=32,400
32,400x13years=421,200
And the house still worth money. And as time goes on rent goes up so this snt exactly accurate because I didn't add in the yearly increase of rent.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
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Quote:
Originally Posted by GiantRutgersfan
I wouldn't get involved with a $400,000 single family as a rental, at least long term. Especially in Texas cause that's probably gonna be a big house on a large lot requiring maintenance. I think high end homes generally have a limited appeal to renters too. IF they can afford $3000 a month, why not buy?
That's what's different about Texas I guess. I went looking at homes there and for $110K to $150K you could get a pretty decent house. Yet there are people with decent credit who rent those homes for $1200 a month. They could easily buy. I had a new home in Houston I paid $160K for and rented it for $1600 a month. For that rent I couldn't figure out why the tenant didn't buy. Of course when I got the property tax bill of $5,500 I started to see maybe why . . . .
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
Quote:
Originally Posted by Electrician4you
In the long run that house will produce more than 400k. Selling paid off property with huge positive cash flow is financially dumb. Especially if it produces with minimal outlay.
3,000x12=36,000
36,000-10%=32,400
32,400x13years=421,200
And the house still worth money. And as time goes on rent goes up so this snt exactly accurate because I didn't add in the yearly increase of rent.
If the house is $400K, the property taxes may well be $12K to 13K a year or more. You also didn't factor in vacancy. Lets say it's vacant for 2 months every two years as tenants move out.
Your $32,400 is now closer to $18,000 a year. You also have some repairs and maintenance, but let's be modest and just figure $1,000 a year. Don't forget insurance which will be another $500 to $1K
so in this case it's 13 years x about $16,500= $214,500. At this age it might well need new carpet and paint, roof work, maybe an ac unit.
So far from what I have seen in Texas, homes don't appreciate much. So your return is off by about 50%
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