Advice from smart people

[surveyor]

antioch

If you sell, maybe you can offer seller financing for those who are unable to get traditional financing. Or you could also offer rent-to-own conditions.

Not ideal, and certainly risky I admit.

I ran some numbers that involved you re-leveraging the property and using it as a rental. Assuming you invested the leverage into cash flow out of state properties, I had about a $1000/mo. cash flow. It’s difficult to calculate the rate of return because the money you invest in is so low, resulting in rates of returns of 100%.

Still, you may not want to invest in more real estate anyways…

[Anonymous]

Let’s say you have to drop it down to $250K to sell it. Using a very conservative rate, you could likely earn 4% risk-free on that money. That nets you $10,000 per year, or $833 per month. If you were able to get 5% long-term, that would put you at around $1000 per month in interest.

So, depending on the actual net you get out of the sale, you will be able to do almost as well return-wise as you could in something that is entirely risk-free (3 CDs with each < $100K) and requires no effort on your part as you would be able to do by renting out the house. Factor in the property taxes each year, the capital loss deduction you will be able to take into perpuity, having to deal with tenants, money to fix it up, and all the other crap (potential liability) that comes with owning a rental, and I can't see a whole lot of reason for not trying to sell the house and then just putting that money into a CD or Treasury bill or something. Basically, you need to figure out how much per year in risk-free interest it would take to equal the net rental income you could get, and then figure out what you would need to net out of the sale to get there. You may find that you can drop the price quite a bit more because risk-free, no-hassle interest just has so many advantages over trying to make money off a rental house.

[Anonymous]

Let’s say you have to drop it down to $250K to sell it. Using a very conservative rate, you could likely earn 4% risk-free on that money. That nets you $10,000 per year, or $833 per month. If you were able to get 5% long-term, that would put you at around $1000 per month in interest.

So, depending on the actual net you get out of the sale, you will be able to do almost as well return-wise as you could in something that is entirely risk-free (3 CDs with each < $100K) and requires no effort on your part as you would be able to do by renting out the house. Factor in the property taxes each year, the capital loss deduction you will be able to take into perpuity, having to deal with tenants, money to fix it up, and all the other crap (potential liability) that comes with owning a rental, and I can't see a whole lot of reason for not trying to sell the house and then just putting that money into a CD or Treasury bill or something. Basically, you need to figure out how much per year in risk-free interest it would take to equal the net rental income you could get, and then figure out what you would need to net out of the sale to get there. You may find that you can drop the price quite a bit more because risk-free, no-hassle interest just has so many advantages over trying to make money off a rental house.

[Anonymous]

Let’s say you have to drop it down to $250K to sell it. Using a very conservative rate, you could likely earn 4% risk-free on that money. That nets you $10,000 per year, or $833 per month. If you were able to get 5% long-term, that would put you at around $1000 per month in interest.

So, depending on the actual net you get out of the sale, you will be able to do almost as well return-wise as you could in something that is entirely risk-free (3 CDs with each < $100K) and requires no effort on your part as you would be able to do by renting out the house. Factor in the property taxes each year, the capital loss deduction you will be able to take into perpuity, having to deal with tenants, money to fix it up, and all the other crap (potential liability) that comes with owning a rental, and I can't see a whole lot of reason for not trying to sell the house and then just putting that money into a CD or Treasury bill or something. Basically, you need to figure out how much per year in risk-free interest it would take to equal the net rental income you could get, and then figure out what you would need to net out of the sale to get there. You may find that you can drop the price quite a bit more because risk-free, no-hassle interest just has so many advantages over trying to make money off a rental house.

[Anonymous]

There’s no such thing as a tax deduction for a capital loss on real estate. Don’t let that fallicy influence you. If you don’t want to be a landlord, sell it now.

[Anonymous]

There’s no such thing as a tax deduction for a capital loss on real estate. Don’t let that fallicy influence you. If you don’t want to be a landlord, sell it now.

[Anonymous]

There’s no such thing as a tax deduction for a capital loss on real estate. Don’t let that fallicy influence you. If you don’t want to be a landlord, sell it now.

[temeculaguy]

It’s tough to price real estate based on the list price others are not selling at. Because the rent is 1100 to 1300 and it needs 20k in repairs to rent it out you have to look at the price an investor would find it attractive. I like the heloc for 20k idea, rent it out and payoff the heloc with all the proceeds idea. If you don’t want to be a landlord you will need to get aggressive and not wait for prices to decline before lowering it, catch the one of the last fools, they are out there, go 249k tomorrow and it will go. As an investor I wouldn’t even look at it until it was under 200k (well under). If an investor could buy it for 180k plus 20k to fix it up the loan is $1284 for P&I on the 200k, add taxes, insurance, gardner, maint reserve, etc. and the monthly loss is is 300-500 not counting time between renters or large maintenance. 20-30% cash negative to start is about as much as most investors will go, if there are any left. Some use a rent multiplier of 130-150x rent which puts the high end price at using the high rent and the 150x to make 195k, subtract repairs and that’s 175k at best, using the 1100 rent and the 130x multiplier it is 143k minus the repairs=123k, go find that appraiser who did the 385k appraisal and give him a drug test. I say, congratulations, you are a landlord.

[temeculaguy]

It’s tough to price real estate based on the list price others are not selling at. Because the rent is 1100 to 1300 and it needs 20k in repairs to rent it out you have to look at the price an investor would find it attractive. I like the heloc for 20k idea, rent it out and payoff the heloc with all the proceeds idea. If you don’t want to be a landlord you will need to get aggressive and not wait for prices to decline before lowering it, catch the one of the last fools, they are out there, go 249k tomorrow and it will go. As an investor I wouldn’t even look at it until it was under 200k (well under). If an investor could buy it for 180k plus 20k to fix it up the loan is $1284 for P&I on the 200k, add taxes, insurance, gardner, maint reserve, etc. and the monthly loss is is 300-500 not counting time between renters or large maintenance. 20-30% cash negative to start is about as much as most investors will go, if there are any left. Some use a rent multiplier of 130-150x rent which puts the high end price at using the high rent and the 150x to make 195k, subtract repairs and that’s 175k at best, using the 1100 rent and the 130x multiplier it is 143k minus the repairs=123k, go find that appraiser who did the 385k appraisal and give him a drug test. I say, congratulations, you are a landlord.

[temeculaguy]

It’s tough to price real estate based on the list price others are not selling at. Because the rent is 1100 to 1300 and it needs 20k in repairs to rent it out you have to look at the price an investor would find it attractive. I like the heloc for 20k idea, rent it out and payoff the heloc with all the proceeds idea. If you don’t want to be a landlord you will need to get aggressive and not wait for prices to decline before lowering it, catch the one of the last fools, they are out there, go 249k tomorrow and it will go. As an investor I wouldn’t even look at it until it was under 200k (well under). If an investor could buy it for 180k plus 20k to fix it up the loan is $1284 for P&I on the 200k, add taxes, insurance, gardner, maint reserve, etc. and the monthly loss is is 300-500 not counting time between renters or large maintenance. 20-30% cash negative to start is about as much as most investors will go, if there are any left. Some use a rent multiplier of 130-150x rent which puts the high end price at using the high rent and the 150x to make 195k, subtract repairs and that’s 175k at best, using the 1100 rent and the 130x multiplier it is 143k minus the repairs=123k, go find that appraiser who did the 385k appraisal and give him a drug test. I say, congratulations, you are a landlord.

[jennyo]

Thanks everyone for the comments. Some a little harsh, but most likely accurate. We are lowering to $249K tomorrow, maybe that will at least generate a lowball offer. My husband is pretty adamant about not wanting to keep this thing.

[jennyo]

Thanks everyone for the comments. Some a little harsh, but most likely accurate. We are lowering to $249K tomorrow, maybe that will at least generate a lowball offer. My husband is pretty adamant about not wanting to keep this thing.

[jennyo]

Thanks everyone for the comments. Some a little harsh, but most likely accurate. We are lowering to $249K tomorrow, maybe that will at least generate a lowball offer. My husband is pretty adamant about not wanting to keep this thing.

[one_muggle]

temeculaguy:

It’s tough to price real estate based on the list price others are not selling at.

LOL. That has to be the most concise view of the current RE market I’ve heard.

jennyo, just please please don’t do this (from a real ziprealty price history):

Price Reduced: 06/28/07 — $728,000 to $700,000
Price Reduced: 07/09/07 — $700,000 to $695,000
Price Reduced: 07/17/07 — $695,000 to $689,000
Price Reduced: 08/01/07 — $689,000 to $669,000
Price Reduced: 08/02/07 — $669,000 to $650,000

The $5k drop on a $700k house just kills me.
FWIW: Even at the peak, this house (LA foothills)should never have been above $600k, if that.
-one muggle

[one_muggle]

temeculaguy:

It’s tough to price real estate based on the list price others are not selling at.

LOL. That has to be the most concise view of the current RE market I’ve heard.

jennyo, just please please don’t do this (from a real ziprealty price history):

Price Reduced: 06/28/07 — $728,000 to $700,000
Price Reduced: 07/09/07 — $700,000 to $695,000
Price Reduced: 07/17/07 — $695,000 to $689,000
Price Reduced: 08/01/07 — $689,000 to $669,000
Price Reduced: 08/02/07 — $669,000 to $650,000

The $5k drop on a $700k house just kills me.
FWIW: Even at the peak, this house (LA foothills)should never have been above $600k, if that.
-one muggle

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