Should I sell my house and take a loss, or rent it out and hope for the market to improve?

Question

I bought my very first condo during Sept. 2006; however, this last month I recently accepted a job that will relocate me from CA to AZ. My new company will pay for all costs associated with selling my place (i.e. realtor/closing/appraisals); however, I am responsible for any loss that results from the depreciation of my property. And, as many of you know, the market out here in CA has taken a turn for the worse. My condo which valued at 376,000 less than a year ago is now worth as little as 355,000. I'm listing for 369,000 and hoping for the best; however, I know that i'm going to end up paying an arm and a leg to get out from under this place.

Would it be worth it for me to rent this place out for 6-12 months in hopes that the market conditions will improve? I won't be able to find a renter for what I pay per/mo in mortgage payments, but I should be able to get enough to cover my rent for a new place in AZ.

What should I do? I'm so lost =\

Answer 1

If you can't rent it for at least it's payment, cut your losses and sell! I have some rental property and there is no way I'd pay someone to live in my house. That is what you are doing if you rent it for less...

Answer 2

I agree with Heather; you may not see a real turn around in your home's value until 2009 at the soonest, so your best bet looks like renting out your place. You already stated similar condos are selling for less than your listed price; with the current market you would have to go lower to be competitive and lose on your investment. If you haven't done so, weigh out your options; how much money would you be putting out in the next 2 years or so to keep the condo, versus selling it at a reduced price? If you can afford to cover the balance of the monthly mortgage payments, rent it out until at least 2009, when you should have a clearer picture of where the market is going. Get a local preoperty manager to handle your condo should you decide to rent it and have no one (trusted friend, relative) to manage it for you. Management fees run 5-8% of a home's gross rent, and handle everything from inspections to evictions. It's a good idea to call around for rates. If you don't want to hang onto your condo for more than a year, then sell it quick; prices are not moving up and you may as well keep your losses to a minimum while you can and keep your credit intact. Good luck, I hope this helps :)

Answer 3

If you are able to find a tenant for 1 year, who is paying the amount you pay for mortgage, taxes, insurance and condo fees and keeps the place nice that would be probably the best solution for now.

Question is can you find a tenant.

If not, take all your monthly costs caused by the condo, add them up and figure what it would cost you for 1 year in just maintaining the place. Talk to a local Real Estate Agent and ask him/her for an honest CMA and how long it could take to sell the condo in the current market.

Now you can calculate how much loss you are looking at and how much you have to sell the condo for to sell fast.

You could also consider to list the condo for sale and still offer it for rent. You could also offer a Lease purchase or Lease option and see what would work for you.

You would probably need to an agent who can think outside the box and come up with some creative solutions

Answer 4

Unless you can assure yourself that you would get a very high quality tenant, you are setting yourself up....think about what would happen if the person trashed your condo, what would it be worth then even in a couple years? Also, what if the tenant decides to stop paying you? Do you know the procedures for evicting a deadbeat tenant? Are you financially positioned to absorb the loss of income/paying for two places while you get them kicked out? You will likely have to hire an attorney to file and represent you in court, adding even more expense...I'm not saying don't rent, just be prepared from a cash flow perspective for the worst. You may also have to wait some time for the market out there to rebound, things got really crazy out there. Make sure you have a rock solid lease, be picky about who you put in there, and you should be fine....if you have a good rate, you may even want to consider a Lease to Own....this way they give you a much larger deposit than a security deposit, and you can set the purchase price in one or two years to a value higher than your mortgage, and make their payment what your payment...you can also make them responsible for all maintenance (it will be their home soon enough after all, they should learn how to fix it).

Hope that helps....

Answer 5

Personally I'd rent it out. I bought several homes while I was in the military and rented them out as I moved on to new duty stations. I put them in the hands of a local property managers since I didn't want to deal with being an absentee landlord. It was touch and go on occasion if I had multiple vacancies but eventually rents rose high enough that I was able to sock away enough cash to cover the typical lean times. I also got a nice tax write off along the way. Even when I sold everything off I still had a PILE of cash on hand after paying the capital gains taxes on them -- well into 6-figure territory!

Answer 6

If you can hold onto it and rent it, I would do that. Personally, I don't see the market turning around until 2009. If you can swing the rental on your place in AZ from the income on your place in CA, do it. This also means that you will have to have someone in AZ to take care of any emergencies that come up though.

Answer 7

Cut your losses and move on, the market ins't going to improve anytime soon.
You will then have to pay the closing costs.
If you are not an experienced landlord, you could really lose your shirt or end up with a trashy tenant.
Good luck.

Answer 8

You could do that and it is your best option. Your other option would be to short sale it, but that would affect your credit and you might get 1099ed for the difference.

If your condo is in Orange County, contact me and I can help you with whatever you decide to do. If you're in San Diego or Riverside County, I can short sale it for you.

Regards,
Satar Naghshineh
Amiri Property and Financial Services
Irvine, CA

Answer 9

call a close-by Realtor - ask them to envision advertising your place on a quick sale - the place the economic corporation accepts below is owed on your contemporary mtg - if the economic corporation concurs to the lesser volume - a competent agent will even have them sign off on any distinction owing so which you get off the hook. there is likewise new law by using 2009 that enables that quantity to be written off somewhat than billed to you to be taxed on. The realtor will decide for as lots time as achieveable to get the abode bought (greater useful in the previous a sheriffs sale because of the fact they upload those costs in as quickly because it happens) i'm in MN and we are doing it standard - we've alot of short sales in this state.