Sell for loss or move in and wait?

Question

I bought a 3/2 in 2005 and recently started renting an apartment while going to school 100 miles away.  I owe 130k on home and have it listed for 124,900 and have been lowering for last few months.  My plan, after reading many threads on this site for the last month or two has led me to originally sell old home and buy duplex/triplex with VA home loan.  
Now...I have been accepted to a different school program back in my hometown.  Question I have is this: Do I move back into house and try to refinance (original at 6.25%) and wait until bluer skies...or do I still try to sell SFH and keep looking for good deals on duplexes in hometown?
My wife and I have enough money to keep paying mortgage and rent and will continue to have that, but I don't want to keep eating 1100/month on an empty house that may not sell.  After realtor fees, etc., we are already expecting to eat 10-15k just to sell it.  Is it worth it?  Thanks for your time and I eagerly await your responses  :D

Account Closed · Answer

Its not uncommon for banks to require 2 years of rental history especially for first time landlords.

Sounds like you would be better off to sell this place unless it makes sense to live in the home.  I would not spend to much time thinking about what you paid for the house because there is no way to undue the transaction.  Probably best to sell take the loss and learn from the experience.

Many single family  homes are put investment properties.  Your eyes are wide open now and I'm sure that you will choose a better investment property in the future.

Sam A. · Answer

Thanks for the clarification Vikram.  It isn't good for renting and/or cashflow.  That's kind of why I am leaning more toward a sale...but that sale will set me back 10-15k.  Hard lesson that shouldn't happen again.  Curb appeal means very little to me now that I've learned a little on this site ;)

Chris Walker · Answer

I sold one of mine on a land contract with a 5 year period.  If they choose to extend, that's fine, and allowable.  If not, they can give it back and I can sell again.

Meanwhile, it's occupied and cash flowing.

Jay Miller · Answer

You need a place to live regardless.  Why not refi and stay there until the market improves.

You can still look for investment property and purchase one or more while you live in your house and finish school.  This will eliminate one house payment and keep you from taking a loss on your house.

If you really want to sell your house now then look into selling the house on a land contract. If you do this yourself with no Realtor involved you will save 6%.  Get a decent down payment and use for your next home.   You should also expect to get top of your price range if you are offering owner financing.

Feel free to ask any questions if you need further info.

Derrick Sakai · Answer

Why shoulder the loss when you can profit from it? Have it rented in the meantime until the value goes up.

Tim B · Answer

Sam, you bought one depreciating asset that is under water - so why buy another depreciating asset.  Would you buy a stock knowing that it will probably drop in value in the future.  Real estate is like any other investment.  If you really want to buy real estate buy a REIT.

Sam A. · Answer

Thanks again for your help guys!  I have accepted a position for school for Respiratory Therapy at the Mayo Clinic in Rochester, MN where my house is/was for sale.  I will pull it off the market and move back in.  Having the home there and working and going to school all within 2 miles of each other will be better than then the $800 extra I pay each month for rent/storage/gas.  I have decided to use some of my savings and buy a distressed SFH.  I went and looked at 5 today (after reviewing many) and one in particular seems to be a decent choice.  I am crunching some numbers tonight and tomorrow and will see if the loan - down payment + rehab cost will fit in the 2% rule.   As it sits now, as long as the rehab is under 15K, the house should be ok.  Rents for 2bd/1ba that are similar in that part of town go for 650-850 and 2% puts me around 618/month, so I am getting the butterflies in the stomach about this number crunching...hoping it will pan out.  I'll keep ya updated as I come across any major problems or details.  Thanks again for this site...I check it a couple of times a day now just about every day--you guys are awesome!

Nick Henson · Answer

Agreeing with Jay and wondering why you are not shopping around for other lenders to do the refi. With all the new work you put in, have you had a new appraisal? If you are not looking for a high LTV, signed lease agreements may be enough to verify the income and you have good ownership seasoning. Shop around!

Jay Miller · Answer

I am not sure why the bank is telling you that you have to have a renter in there for 2 years before they will help  you.  They should give you a large percentage of the rent to count towards income once you have it rented or sold on LC.  I am not a loan expert though.

I do a lot of owner financing and have loans with commercial loan dept of local bank.  They do things a lot different that the residential loan departments.

If you can not get the results you are looking for from your current bank try somewhere else.

Vikram C. · Answer

I meant, whether it is a good deal as an investment.  Not based on the quality of the upgrades or how much you like it.  If the cash flow and / or appreciation do not justify the price you can sell it for, then you should sell it.

Sell for loss or move in and wait?

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