Sell or keep 100 year old four plex?

Question

We own a 4-plex. It's a 100-year old house converted into 4 separate 1 bdrm apts. It can be profitable but needs some major work (windows, floor beams need to be jacked, electrical work, etc.) We live in one of the units but want to move closer to family. We were offered $95,000 for it a couple years ago. But realized we couldn't afford to move at the time. Should we keep it as a rental and use it as collateral to buy a duplex closer to family? Any ideas or suggestions would be appreciated. thanks

Answer 1

Is the property free and clear? Do you need the money to purchase a new place where you plan to move? What does it cost to fix up? Will the fix up increase the sales price? How much would the increase be?

If you need money as a down payment on a new house once you move can you get enough of a mortgage from the 4 units to cover the repairs as well as the down payment on your new place?

You would need to get the property repaired to get the maximum price for it.

Once a new mortgage has been placed on the four units will you get enough rent to cover the mortgage?

In order for you to make an intelligent decision you must know the answer to the above questions.

With me and everything being equal I would keep the property and place a local property manager in place to manage the place. They will keep the place rented and let you know of any major problems that might arise.

Answer 2

I agree with Lee, depending on how far away you are going to move. If it is thirty miles or so, that should be manageable. But being an out of town owner is tough. Coming in for showings, dealing with tenants, maintenance etc..

You didn't list selling as an option, but that is one I would consider in this position.

You don't mention if you own it outright, have a mortgage, or have concerns that you cannot sell it for what you need to get into something else. If you owe on it, can you get enough money in a refinance or second to buy another investment property? Chances are you will need significant down, at least 10%, for whatever you are considering to purchase.

Answer 3

I would sell. Only because of the hassles of being an out of town landlord. I sold all mine when I decided to move for that reason. Also you will get tax advantages if you sell within 2 years of it being your primary residence. I believe that 1/4 of the capital gains will be tax free in that instance, since you are occupying 1/4 of the units. But check with an accountant before you sell!!

Answer 4

It sounds like in you case you should sell. Take advantage of the tax breaks you are entitled to and you dont have to worry about all those repairs to know about, and dont forget the ones that will "pop up" as you go along. Sell it and buy that duplex closer, landlord being next door is much better!
Good luck!

Answer 5

i think of it is okay to tell him that when he's at aunties abode he might desire to sleep with something on, perchance get him something cool to sleep in, if that's what you opt for to do, or maybe the blow up mattress is a sturdy thought and then he can sleep bare.