How about doing a cash-out refinance with a 3 or 5 years ARM? You’ll be able to get a good amount of cash while still getting some cash flow due to having a lower interest rate. Furthermore, you won’t have to pay taxes until you had sold the property…
I would like some advice from you seasoned investors. I am new to investing. I own a house free and clear, ie. no mortgage. It’s appraised at 90k and I have 28k invested. I need to put around 10k into it to bring it up to retail or rentable condition. My question is: Should I sell and make my profit of say 40-50k or rent it out at around $750/mo. I don’t feel like becoming a landlord but I’m in this so well it obviously would generate a nice cash flow. If I keep it I’m thinking of taking out a 1st mortgage of say $60k so I can have some instate cash. Any thoughts or suggestions?
Re: 90k property–Rent or Sell??? - Posted by Eric - GA
Posted by Eric - GA on November 15, 2003 at 22:26:48:
Honestly, more details are needed. First instinct I have is to keep as a rental…you’d be hard pressed to find someone who was faced with your situation 15 years ago and would say “I wish I hadn’t kept that house.” Renting has lots of benefits…cash flow and depreciation to offset your regular income. BUT, if it’s not for you, then it’s not for you. No sense putting yourself through something you don’t like just to get $$. Is this a house you live in? If so, you have a unique opportunity to sell and get that large profit tax free. If not, you can move in for 2 years and sell it tax free then (when it’s worth even more!). If you keep it, why do you want the instant cash? Do you need it for living expenses, or do you plan to borrow it to incorporate it into an investing strategy (R.E. or otherwise)? Depending on where you are in life, letting that money stay in the house (earning a guaranteed 6%, or whatever your mortgage rate would be) might not be a bad thing. Don’t get me wrong, leverage is a good thing, but if you’re trying to stay a little more hands-off, then having the money in the house gives you great flexibility.
Eric, thanks for the comments. I bought the house through foreclosure about 3 weeks ago. The previous owner is moving out this week-end. I paid cash for the house and thought that if I kept the property I would like my cash outlay back plus I could borrow more in order to have available cash to buy more properties. The rent will easily pay the monthly payment. Any other thoughts will be appreciated.
Re: 90k property–Rent or Sell??? - Posted by Mike C.
Posted by Mike C. on November 16, 2003 at 08:25:45:
Why not lease option it to one of the smart inversors right here on this board? You could make it a long term lease say 6 years. Factor in some aprecation to the sales price. you get cash flow and all the tax advantages of ownership with none of the landloard hassels. And you can refi and take cash out any time you need to.