Thread: Stuck in bad market- Should I consider renting?

If you live in the town where the property is owned and can carry the house until the economy turns around, I would no sell the house in this market.

thanks.................................

I read a lot of blogs on a daily basis and for the most part, people lack substance but

Seems to be the concensus- If you don't have to don't bother trying to sell. You will end up taking a bath.

Reading up on renting. Thx

This is not a seller's market, therefore if you can afford to hold you'll probably be best served doing so until the market recovers...

Have you considered selling via a Lease/Option? It's relatively easy and you'll actually earn a lot more than if you sell on the open market. On top of that, there are tons of people out there who would like to buy but can't because of the banks overly strict guidelines these days. This would allow you to become the "bank" on your own property. You and the "buyer" would agree on a purchase price, then an interest rate. You collect a decent downpayment at closing. The buyer moves in and begins paying you monthly, a percentage of the payment goes towards principle and the remainder towards interest. You can set the lease for as long as you'd like... 1yr, 3yrs, 5yrs, etc... The buyer has up until that time to pull it together and get financing. At the end of the lease the buyer makes a "balloon payment" to you completing your involvement in the deal...

Heres an example, lets say you have a $100,000 home. The buyer agrees to pay you full price and you agree on a $500 per month payment with 80% going to interest and 20% going to principal (Keep in mind, I'm just trying to keep the numbers simple). So every month they are paying $100 to principal. Now lets say that you have a 3 year agreement. At the end of 3 years the buyer still owes you $96,400. They get the financing they couldn't get 3 years ago and they pay you the "balloon". You've now earned a total $110,400 on your property, eliminated all your monthly expenses on it for 3 years, and got more than your original asking price! Because the person is looking to eventually own they naturally take better care of the property than a simple renter. To protect yourself as well you can have a clause in the contract that stipulates that if they ever miss 3 payments consecutively, they forfeit their interest in the home and all money paid towards it. If at the end of 3 years, they cannot find financing, you can either renegotiate for a longer term or remove them from the property and return it to market with an additional 3 years of equity built up!

People will buy in this fashion, did you know that in 2005 only 1/800 real estate transactions were done with "private money" (seller financing is a form of private money) and in 2010 its estimated that now 1/50 are closing with private money!! There are people out there that will scoop this up!

Feel free to message me if you'd like some help

Firstly, I don't understand how you'll be "giving it away" if you own it outright. Anything you receive should be considered profit.

Secondly, if after 60 days, in this market, if you had many lookers and no offers, then you now have two problems: It's either over priced or it's the location. -read this last sentance again.

Lastly, you can only be selective in choosing tenants if you choose to do it all by yourself and don't advertise. If you ask for the assistance of your Realtor, they are bound by Federal Laws and Ethics. The Realtors screen all applicants. They obtain a credit report, a criminal background, (including Meagan's Law background). They obtain the prospect's W-2s, and correspond with their employer(s). You then choose the tenant based on this information and THIS information ONLY.

Renting out your home is an extrememly good idea, whether you own it outright or not. You'll have SOME money coming in and that's better than NOTHING. If after a year you choose to offer your tenant a Lease Option, call an attorney and they'll draw up the paperwork.

Good luck, just do it.
CM

Thank you for all the good advice. I had not even thought of owner financing. Truth is I was looking in to rental property before I moved. I had the cash and wanted to do something other than sit in a bank at <1% interest.

Sorry for the term- "Giving it away". What I meant to say is I know the market is horrible, but I feel I can do better by renting or some other means to get a decent price rather than taking what the the open market has to offer.

As you don't have any mortgages, I would suggest you to hold on to your investment. Thus waiting for market to improve. Now during this time if you are want some earnings through rent, then go forward and rent the property. Its better to have something that to have nothing.

Well then, at this point you have several choices:

1) Rent it out, have something coming in, have the Realty manage it if you choose.
2) Wait for the market to turn around. Sitting on it for another two years?!
3) Lower your price and/or offer closing costs. -this will entice buyers.
4) Offer owner financing with the help of a compitent Real Estate attorney. Offer to hold the note for a few years at a decent interest rate. That way, if the buyers still don't qualify for a 30-fixed in a few years, you can come up with some other arrangement or locate new buyers/tenants. Again, with the help of a Realtor and compitent REAL ESTATE counsel. REAL ESTATE counsel. REAL ESTATE counsel.