Rent out or sell a mortgaged house?
In these hard times we have no choice but to move in order to find work. Our dilemma is whether to rent or sell the home we bought with a mortgage 3 years ago. On our street I would say 1 out of 20 is for sale, and half of those have been for sale for a year or more with most prices as reasonable as we bought our house for. We have added air conditioning to our house since we bought it and fenced in the backyard.
If we sell, in order to sell fast (because we won't be able to do rent AND a mortgage for very long), I'm guessing we'll need to drop at least $20k off the price we bought the house for, and the real estate fees will be around $5k. Can we refinance that loss into a smaller mortgage when the house is sold? In addition we will have a $900 mortgage payment to make every month until the house is sold.
If we rent it out, assuming yearly maintenance will be minimal, and we can rent the house for somewhere around $800, then after subtracting the mortgage payment we are losing only $100 a month?
To me it makes more sense even with the small loss and the hassle of managing the rental, to rent out and take a small monthly loss until the market improves than to sell and take a loss of ~$35k. Even if we are paying a fee to a managing company to rent, it would still take a decade to lose as much money as selling..
sorry if it wasn't clear; we definitely won't be risking another mortgage for a while.
- alicialionsLv 710 years agoFavorite Answer
If you rent it out, the difference of $100 per month would not be a loss if you consider your home an investment in your future that someone else will be paying most of for you.
Definately rent, but hire a responsible, professional property manager with a good track record...not some shoddy low life who won't ensure your property is being taken care of.
- dudleydoLv 510 years ago
Just an answer from someone that used to sell real estate:
I would expect in this economy that you may lose more than you realize if you are trying to sell in this market, and especially because you say that there are 1 out of 20 homes for sale in your neighborhood. If you only intend to rent it for $800 per month and you pay $900 per month on a mortgage, you will lose when tax times comes around and you will lost $100 per month also. I would try to rent it for whatever the houses in your area are renting for, without going way down to $800. No one can tell you what to do, but you can be sure you will end up having to sell your house for much less in this market and no one knows how long this will keep going on. The more empty houses there are in your neighborhood, the lower the prices will go. I would try to rent it for as much as I could - swallow the tax money you will lose - at least you will be keeping up the mortgage payments. Are you sure that you will be able to buy another house on your income and are you moving into an area that has job potentials. All of these things should be considered. Try talking to a realtor to see what he/she thinks and see if they can come up with an alternate solution. It is a tough, tough market right now and the economy is taking its time to move upward. Good luck and God bless.Source(s): Common sense and hoping for the best.
- ?Lv 43 years ago
in case you sell, the place will you bypass? in case you are able to not have sufficient funds this very own loan - the place will you get the downpayment for the subsequent residing house? Or the protection deposit for an residence? besides the fact that, in case you are able to not pay the expenses... and additionally you get in the back of on your very own loan, the economic company can foreclose and evict you. appears like a great residing house - are you able to a room or 2 to roommates till you come across a job? besides the fact that apparently like a good answer could be to purchase a smaller residing house, with a prevalent very own loan in an area close to on your husband's job. you get carry of in over your head on those stupid loans that do basically what they are doing to you - making you bypass bankrupt as a results of fact they enticed you right into a house you are able to not have sufficient funds. in case you sell THIS residing house - you will lose funds on it - that's a purchaser's marketplace appropriate now, and additionally you will not recoup any of the money you put in.