Leaving Natomas - Better to sell or rent out house? (Sacramento: mortgage, loans)

[petenice]

My wife and I are going to be moving out of California to Texas in about 2 months due to my job relocation. We bought a house in Natomas in 2002 for 325K. It appraised for 490K in 2006, but we are now estimating (based on similar homes for sale in the area and zillow.com) that it will sell for about 390K.

If you were in a similar position, would you:

a) sell the house in Natomas, make a profit and a clean break
b) rent out the house in Natomas and hope the market picks back up
c) do something else completely

Bottom line - is renting our home in the Natomas area a good investment, or do you think there are better, and easier (i.e. no rental hassles) ways to invest for the future?

This would be my first experience with renting out a home, so if anyone has home rental success or horror stories, I'd love to hear those as well.

[cw68]

Since you have no experience in renting, and you will be far out of the area, I would recommend selling.

You have no way of screening/interviewing the tenants. You would need someone to be near in case of emergencies like plumbing, etc. There are a number of bad possibilities out there.

Take the profit, though it's not as large as it would have been earlier, and move on.

I also don't think Natomas is going to be a good investment for a while. The investor market pulled out of Natomas long ago, there are a high number of buyers using "creative" loans and there's the whole levee issue.

[NewToCA]

I faced a similar situation last year in my move to California from Ohio, and I took the lower price and moved on with my life, with no regrets.

In late 1979, with interest rates rapidly rising, I faced a similar situation of declining home prices in moving from Cleveland, OH to Washington, DC. I held out for the higher old price, about a $5,000 difference at that time, and to make a long story short rented the house out for the next eight years. I lost money each year while doing this, and ultimately sold it for little more than I would have received earlier. Bad move.

The problem is what if you have tenant trouble, repairs or vacant periods? Feel like covering two house payments? Better to cut your losses (or lessen your gains) and move on.

No doubt about it at all in my point of view.

Best of luck!

[KidBlue]

I agree with the other posters. I've had rental homes before, and it was a huge amount of work for the money even living close to our rental. Also, if you are without a renter for a period of time, you would have two house payments to make.

[petenice]

Thanks to everyone for the advice. While it would appear there is potential for the market to rebound, there are no guarantees. Also, the possibility of problems with renting seem to outweigh the benefits in my estimation.

[Hawkeye48]

Do you think you could rent the house out for a positive cash flow? What I would recommend doing is talk to several property management agencies in the area. Check each one out with the BBB. If you can find a great management company you can rent your house out pretty much worry free. Just be sure to talk to very old established companies. The last thing you would want to do is have to fly back and forth to Sacramento to handle rental concerns. The big advantage of keeping a house in Sacramento is you know even though the market is down it will bounce back. And it's in an area where people have to save for years and years before they can scrape together enough money to purchase a home. For many people purchasing a home in the Sacramento area has turned out to be the best financial decision that they have ever made. Think twice before you sell your home.

Also sit down with a financial advisor. It would be worth spending a few bucks to get professional advice. There may be several possibilities you may not have thought of.

[Lynda Casagrande]

We live in Idaho and have a house in Natomas which is worth less than what we paid for it. Does anyone know what the outlook for Natomas is for the future, i.e. has anyone heard what the pundants say about how long it will be.

[renngrrl]

Market to rebound? LOL how long can you wait?

[volleyballer]

I also agree with the other poster. Selling for a gain would be much more beneficial than renting. If you look on Craigslist, there are plenty of people trying to rent their houses right now, and there is no way that rent will cover anyone's mortgage payment.

We sure have not found the bottom, yet it may be close, but that doesn't mean that in two years from now the housing prices are going to rise 20% like before. If you read the conservative economist views, it looks like 2008 is going to be a difficult year, then a good 3-5 years of stagnant home prices while inventory shrinks. After the 3-5 years, then there may be some housing prices gain. Let's hope it all goes quick.

But either way, just sell the house and wipe your hands. Especially if you'll come out with a gain. I actually live in Natomas see many can easily pick out the rented houses. They'll instantly take the equity out of your house by being careless. Good luck!

[Luke9686]

Sell.

First, there is no way you will rent out the place for what your mortgage payment is. Unless you put a huge amount down.

The market hasn't bottomed out yet. The house will probably lose value in the next couple years.

In 5-7 years the houses will start to rise again, but not like they were before. That's why house prices are going down. They were artificially inflated. They never should have rose that high to begin with.