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Got a dilemma here that I want to seek some suggestion.
Currently own a interior TH with one-car garage, 1800 sqft built in the 90s with some updates in kitchen and bathrooms (need some cosmetic cleanup or fixes). Very accessible to highway, airport and shopping area, neighborhood is pretty family friendly and generally well kept by HOA. Schools aren't the best in the county but overall the county is one of the best in the state in terms of education.
We moved in five years ago with our newborn in a hurry, so not much has been done with the house. No repainting, no renovation etc. Will move about 50 miles away in 1-2 month and we are debating if we should rent out the th or sell it. We were quite ignorant in terms of real estate investment and tax benefits associated with that, please bear with my questions. And we are stressing out with the move, necessary repairs/renovation for the new house and won't be having too much resources left to renovate/facelift this current TH.
Talked to a few acquaintances in real estate, and got a few pieces of info, Property Management companies would charge about 8-10% plus one month rent to manage the whole thing, and data shows that in my neighborhood, it usually gets rented out but may take a month or so. I was advised that comparable TH (similar size and room) get about 1900-2000 rent per month, but with company fee, it pretty much each through all the margin.
Biggest concern we had about renting out is that there are a few big ticket items are overdue (and could need replacement in 5 yrs), HVAC and roof (may also include the waterheater). So I'm looking at 15k-20k cost likely within 5 years, and so far I do not see too much of a quick appreciation in my neighborhood. I think for the past 5 yrs at least, the value of THs are not increasing (I overpaid a little when buying it, and my neighbor's TH just got sold for about 10k more than my purchase price, with one more finished bedroom and bath and better upgrades judging from the listing pix). Also, the rental agent I talk to suggest at least changing the carpet and repaint entirely (cost upfront).
On the other hand, it looks like the selling market is pretty active. Two of my neighbors th got sold before the first openhouse within 5-10 days. Both of their THs look much better in terms of upgrades and staging. I'm a little pessimistic about my TH in the market compared to the two recent sales, but my gut feeling is I should be able to list it as my purchase price without too much work/repair/upgrade put in.
Would it be wise to hold on to this TH and wait for appreciation (with potential 15-20k cost for the overdue HVAC, roof, waterheater etc)? Or we should sell it while the current seemingly hot market?
I was a landlord for twenty years with three rental properties.
My advice:
SELL.
Being an absentee amateur landlord is a big risk and I can almost guarantee that you will lose thousands within the first year. Property managers are often dishonest and/or incompetent.
I agree that you should sell. A property manager will cost much more than the 10% fee. There are always lots of other costs and they will nickel and dime you to death. You will end up out of pocket.
And with the costs coming up in the near future to upgrade things, I don't see you coming out ahead by renting. Plus, if good renters aren't put into it, you could be out of pocket in fixing damage to the place, too.
Why not just sell it as is? I bet you would break even anyway. If you spend $10,000 to get $10,000 more in selling price, you're not ahead, if you get my thinking.
And remember, the agent will get a cut when you sell, used to be around 6% or so. Agents want a higher selling price, because they make more money. They don't share in the cost to get that higher selling price, so it's easy for them to tell you to put in new carpet, etc. , so their commission will be higher.
I say just sell it as-is. Depending on how your market works, list it for more than you expect to get and then let them negotiate you down. Or if it's like it is out here in the SF Bay Area, you list it at a price you'd be happy to get and hope there is a bidding war.
Just know what your bottom price is, minus commission and selling costs, and get it sold.
Sell it! You are a babe in the woods when it comes to landlording. Don't wait for appreciation - it may not come. Meanwhile, you could lose many thousands on that first tenant. Sell it now, even if you have to bring money to the closing.
Clean it up, and don't do anything else. Don't paint, don't do the carpet. Just put it on the market before you move out. Assuming you declutter it, it will look better with your furniture in it, than bare. The bad paint, bad flooring, etc will all show up much more if your furniture is gone.
This is an excellent time of year to sell, and townhouses are in demand. Sell it, now!
Sell it! You are a babe in the woods when it comes to landlording. Don't wait for appreciation - it may not come. Meanwhile, you could lose many thousands on that first tenant. Sell it now, even if you have to bring money to the closing.
Clean it up, and don't do anything else. Don't paint, don't do the carpet. Just put it on the market before you move out. Assuming you declutter it, it will look better with your furniture in it, than bare. The bad paint, bad flooring, etc will all show up much more if your furniture is gone.
This is an excellent time of year to sell, and townhouses are in demand. Sell it, now!
Great thinking on the "furniture vs bare" part. The follow up question I have is, should I just declutter and show (before we move out) and after the inspection/appraisal, or pay for a staging company after we moved out?
I was thinking if we leave some furniture in and moved to the new place, would it be much of cost to remove those furniture later (moving cost twice).
Should I go with a full service agent so that they can help me stage or ideas for best bang-for-the-buck facelift idea or a redfin agent for lower listing cost but may not be that attentive? I do have two most recent sales price in my neighborhood as reference so I won't be pricing it ridiculously, but on the other hand, I'm a little overwhelmed/helpless in terms of what's the bang-for-the-buck I would most probably need to do to get it to sell.
Either way, you're going to lose money at this point. Are you moving because of a job change? I ask because in some regions of the country, 50 miles is commutable and wouldn't necessarily require a move.
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