Rent it out or sell it?

**Talkintoy** · Oct 5th, 2007, 03:53 PM

I have this home 45 minutes away from my current residence. Heres the neg arm loan scenario:

Minimum only $1035.19
Interest only $1637
P and I $18xx
15 yr $xxxx

I owe $256k and line $64k and its probably worth the payoff on both loans.

Its was rented before for $1345 but now just sat for 4 months with no renter as i've been busy to show the home (

) Can someone advise on what i should do. Sell or rent it out again? Its putting a stress on my financial situation as my income is not enough to support this home and my current home mortgage.

**yveskleinsky** · Oct 5th, 2007, 04:00 PM

sell! Sounds like if the minimum only is less than the interest only, you have a negative amortization loan- and if you do, you are adding to the principal everytime you make less than the interest only payment. This property is an alligator.

**Talkintoy** · Oct 5th, 2007, 05:06 PM

Thanks for the reply. You should see the pool as it does look like theres an alligator in it.

**JesseO** · Oct 5th, 2007, 05:12 PM

I've seen a pool go from soupy green (maybe 5 inches of visibility) to crystal clear in a week. Good luck with yours =)

**tbsells** · Oct 6th, 2007, 05:32 PM

Sell it. If you read your post over you will see its a no brainer.

**yveskleinsky** · Oct 6th, 2007, 06:31 PM

Take the loss and chalk it up to education. I think only holding on to this property will just eat up time and money- both of which could be better spent.

**Talkintoy** · Oct 6th, 2007, 07:39 PM

Thanks guys for the advise and reply. Guess i'm holding to it coz its the first home i've ever bought and emotions are attached to this home. Its a very nice home but area is not too good and its great for a family and not investment. House deserves a home owner that will take care of it and not to make money out of it. Time to let go.

**randallg99** · Oct 6th, 2007, 08:06 PM

if you are looking for love, then this home will happily suck you dry.

**Talkintoy** · Oct 6th, 2007, 08:14 PM

Your right... It'll take advantage of my love and kick me off to a gutter and get anothr love from someone.

**randallg99** · Oct 6th, 2007, 09:41 PM

I should have been clearer and avoided the sardonic tone... my apologies.

my train of thought when evaluating a business deal was to evaluate its rate of return... in this case, you may want to try to rent it out while it sits on the market.

the negative amorization creates an urgency to let this property go ...

live and learn... lots of good advice on this entire forum and I hope at least someone around here takes it to heart...

**Talkintoy** · Oct 9th, 2007, 01:14 AM

Originally Posted by randallg99

I should have been clearer and avoided the sardonic tone... my apologies.

That's ok... I understand what your trying to say. Dammit, someone is interested in renting it again. My mind is like rent it or sell it? This home is in california. Anyone rent it out or sell it and buy myself more time? Good time to sell or ??? I can get it to fixed loan buy P and I is like almost $1700 and rent will be $1345 and ins, taxes etc... I think i'm stupid if i rented it out again hoping for this market to come back and give me some equity but i don't think that'll be the case someday. Also i think its because its my first house to sell and i'm kinda scared like a mother flower. Please give me a vote everyone... reply (nay)sell it or (yay)rent it? You guys decide and thats what i'll do!!!

**hakrjak** · Oct 10th, 2007, 01:52 PM

Here's my glass half empty response:

Speak to a realtor in your area and find out how realistic it is to be able to sell it for what you want, and still get enough to cover realtor fees. If you sell in the $300k range at a 5% commission, that's going to cost you $15,000 additional.

Also figure that you'll have a K to $1.5k in seller paid closing costs, etc....

Then factor in your holding costs for 90 days (The market is still cold out there right? Minimum of 90 days to sell you think?)

Then compare those costs to what your costs of renting it will be. Factor in the monthly loss you are taking, and what the tax write off comes to at the end of the year, etc.

If I'm right, I'm guessing that your area's REI market is cold and slow -- which most of California is currently. I don't know that you will have any success at selling anywhere near full market price right now. Renting and bleeding slow until things pick up enough to be able to unload may be your only option.... Your other option could be taking a blood bath and losing thousands every month until sold (And who knows when that could be).

- Hakrjak

**Talkintoy** · Oct 11th, 2007, 02:17 AM

I've decided to just sell it for whatever the market value is currently. It has to sell short sale since what i owe is more than the market value. I wonder if this will come back to bite me since i sold the home at cheaper price than currently owe? I was headed in disaster regardless so i'd rather take the loss now and rebuild again. This is uneducated investment gone bad 100% financing. I know what my mistakes are and happy that i learned for future from them. Its sad to be in this position but hey i didn't have anyone to teach me and i did things my way although it was wrong. At least I was willing to pull the trigger and do something than other people being scared. It would've been right if market kept going up but its not like that. I dont feel bad as i'm not the only one in this but true professionals and good investors as well.

Looks like i will do all 3 properties on "short sale"

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