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Here are the numbers.
Bought new construction for 240K in 4/06
Listed since 6/08, after 2 price drops we are now at 230K.
We are still competing with builder.
The house is vacant and it is costing us about $1500/month.
The house is in the Atlanta area and we now live in CA so we will have to use a management company.
So should we rent it out or just keep dropping the price. What do you think?
How much could you rent it for, do you think? What are other houses of comparable size renting for? There will be a cost to using a management company. If renting it gets you some money, it should definitely be considered. But if you are going to lose money by renting it (slow bleed) vs lose money by lowering your price even more to sell, you need to really crunch the numbers to see what makes more sense to you.
I would suggest you talk with a tax person to see whether it would benefit you to rent it or not. Being a landlord, even with property management is not usually *fun*(been there done that)
A lot will depend on whether you can rent it for enough to cover your mortgage, ins, property managment fees, etc. Research carefully!
wow I am surprised you haven't sold in the Atlanta area....
Something else to consider---repairs! Tenants don't take care of houses and it doesn't matter what neighborhood you are in. Also consider what it MAY cost you to put it back on the market at a later date after you move the tenents out. On my last one we had to put 15k into it just to list. Give this some serious thought, a long distant landlord is ALWAYS IN THE DARK.
Here are the numbers.
Bought new construction for 240K in 4/06
Listed since 6/08, after 2 price drops we are now at 230K.
We are still competing with builder.
The house is vacant and it is costing us about $1500/month.
The house is in the Atlanta area and we now live in CA so we will have to use a management company.
So should we rent it out or just keep dropping the price. What do you think?
TIA
If you keep dropping the price you are chasing the market down. If you had listed it for 230K from the start it would have sold. Now 230K doesn't sound like a deal to anyone.
Dump it for 20% below your comps and lick your wounds.
I wouldn't rent it unless absolutely necessary. It will be hard to sell if you are renting it. I personally would not even look at a property to buy (to live in) that was currently being rented.
I also agree that 230K sounds too high. If you only paid 240K and are competing with the builder, you need to lower it a LOT more. Try it first before renting.
You are opening yourself up for some serious headaches and money loss. We had another house that we rented and ended up evicting two people for non payment. Granted with a property mgmt company they handle all that, but it was a struggle. Things break, people complain, yadda yadda yadda. Unless you want to devote a lot of time to this, dont do it.
suzie, do you have enough equity (or money in the bank) to cover you taking a deep loss on the property? If, so than that may be the quick way out. Kind of like a band-aid. Pull it off quickly. It hurst like he double hockey sticks... but it is done and over.
if you don't, then investigate the rental avenue carefully. It isn't as bad as these folks say, or there wouldn't be any rentals out there. But you do need to know what you are getting yourself into. you may have to rent for less than the mortg. amount, but talk to your tax advisor on how to handle the negative cash flow.
You need to do a pro/con spread sheet and then pursue the option that is the most right for YOU and YOUR family.
Good Luck.
shelly
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