My husband and I bought our first home in 2005. We moved to our current home in 2013 and have rented the first home ever since. We live about 45 minutes away from the rental property.
Recently we decided to sell our first home/rental property. Our main reason is that we are both very busy with full time jobs and kids in sports and the extra work on the rental is stressful. The rental was bringing us around 15k profit a year, although some years we had large expenses (new siding), etc so it cost more than we made. We have no mortgage but paid all utilities and taxes, etc.
The tenants have moved out and now that we are prepping for the sale it’s overwhelming to think about the work that needs to be done to get it ready to sell.
We estimate that if we sell it now/as is- we could sell it for 230-250k
If we put about 20-30k of work into it – we could probably sell for 280-300k. This would require my husband to take a few weeks off work to do some of the work himself
It is in a semi desirable area where houses do sell quickly, so we don’t truly know the value.
Another thing that my husband and I have been debating over is this: He thinks that every month we do not sell the property we are “missing the rent” and that we should sell ASAP to no longer have that “loss”.
From my perspective by deciding to sell we have already permanently ended the rental income so it doesn’t matter if we sell now or in 6 months (aside from the utility costs that would be covered by the rent, but should be nominal on a vacant property)
So should we sell ASAP? Or put some effort into getting “top dollar”?
Selling a rental property
byu/methodicalmess inpersonalfinance
Posted by methodicalmess
4 Comments
Fixing it is always the better move if you can afford it. You’re going to get low ball offers otherwise.
Can you hire contractors to do some of the work?
If the goal is to minimize effort, sell it quick as-is. If the goal is to maximize monetary value, keep the rental and don’t sell.
Doing the repairs yourself to sell it sounds like the worst of both worlds. No future income AND you have to take weeks off work just to deal with it. Also by delaying the selling, you lose the opportunity cost of what you could be doing with that money, including earning interest.
Neither of you are wrong.
But each does need to acknowledge the other.
Letting the property sit leads to opportunity cost. Cash (if sold) could be put to other higher yielding endeavors. Not having renters does not change the fact that there is an opportunity cost to delaying the sale.
Fixing up the property may not lead to a 1:1 return. Doing the work yourself may help this, but again, there is an opportunity cost. You said husband would have to take time off of work which presumably means loss of income or PTO (or whatever).
Generally, homeowners overestimate their return on costs fixing things. So generally, I would recommend selling as-is and letting the new owners choose what to fix and how they want to go about it.
Step 1). Grab a sheet of papervand pencil
Step 2) do math.