Here's The Deal - Need Advice
hey,
can i get some advice?
my mother has 100% equity in a 3/2 and just sunk in 10k to 15k in renovations. its fmv is now around 135k to 150k i think. we want to rent it out and were told that it could rent from 1k to 1.2k a month. If we decide to rent, would it be a good idea to offer an option after a year or two so the t/b will take better care of the place. or since there is 100% equity, should we keep it as a rental and use that income to finance more real estate? the house is in a good part of town and will appreciate, so we could always sell it later if we decide to. also, should we renovate the kitchen (new oven, stove, sink etc. ) if we go to sell? it doesn't fit the new motif and is 70's old. we won't if its just to rent however. any input would help
thanks,
nick
Quote:
On 2003-09-04 10:28, NiKoLaS wrote:
my mother has 100% equity in a 3/2 and just sunk in 10k to 15k in renovations. its fmv is now around 135k to 150k i think. we want to rent it out and were told that it could rent from 1k to 1.2k a month. If we decide to rent, would it be a good idea to offer an option after a year or two so the t/b will take better care of the place. or since there is 100% equity, should we keep it as a rental and use that income to finance more real estate? the house is in a good part of town and will appreciate, so we could always sell it later if we decide to. also, should we renovate the kitchen (new oven, stove, sink etc. ) if we go to sell? it doesn't fit the new motif and is 70's old. we won't if its just to rent however. any input would help
I think you need to sit down and determine what your goals are. Are you wanting a steady income for your mother? Are you wanting to buy more properties? How much time do you have to put into managing properties? How much risk can you tolerate?
When you have determined this, it will be easier to know whether you should rent or L/O or refinance, etc
If you are doing a rental or L/O, I would not bother with renovations.
If you decide to sell outright, you may want to interview a couple of Realtors - even if you don't plan to list. They can tell you whether the renovation would be made up in sales price, an how quickly the property sells. Sometimes you may not be able to re-coup the cost, but at least the house will appeal to buyers, and won't sit on the market for months.
Since you have 100% equity, you can pull SOME of that $ out through refinance, no matter whether you decide to rent or whatever. Just make sure you don't take so much out that the mortgage payment (PITI), allowance for vacancy, and reserve for repairs is going to be more that the rent.[ Edited by 64Ford on Date 09/06/2003 ]
NiKoLaS,
Quote:
If we decide to rent, would it be a good idea to offer an option after a year or two so the t/b will take better care of the place.
you also need to take into consideration
PRO's
1. you option money up front
2. care of the property like you said
3. higher rent
4. facts are facts the t/b will buy about 20-35% of the time
CON's
1. t/b may take frustrations out on the house when he can't finance and you keep option money
2. facts are facts the t/b will buy about 20-35% of the time
Just somethings that came off the top of my head
[addsig]
Greetings,
You sound like you are not looking to get heavily into RE investing, but if you are then you should pull out 70-80% of your cash out (via refi) and purchase 4 more houses in the area. This will use leverage to increase your ROI and will not put all of your eggs (or equity) in one basket.
If, however, you don't want a hassle then just sell it outright. Tenant-buyers can be a pain in the butt, and renters will be for sure.
It all comes down to your goals and expectations. If you don't know these then you need to figure them out, post them here, and we can help you to achieve them.
iglooman
[addsig]