Need Advice! Rent or Sell My 2400 sq ft house in West Plano?

Question

I need advice on my Single family 4 bed 2.5 bath 2400 sq feet house  in west Plano. I tried renting it for $3,000/month through a property manager—got couple of applications in a month, but none qualified. Should I wait another month for tenants, or sell now or put for both rent/buy option? I’m worried about high interest rates (~7.2%) and tariffs impacting buyer demand, though Plano’s market seems steady (median $529K). Has anyone faced this in the area? Suggestions on renting vs. selling in this market?Really confused ....since property is at one of the best locations with good schools and nearby shopping areas?

Peter W. · Answer

I am not the expert that some of the other folks are, so take my advice with a grain of salt.

I think the 3k price point, (unless you are in a major city) is tricky.  The income requirement is between 108k (at 3x income) and 126k (at 3.5x) which is generally enough for folks to be able to save up and buy a house (again doesn't apply to the expensive costal cities).  Plus there aren't that many folks make that kind of money.   I try to target $1500-$2000 as a price point.  I have one property at that price point and I got it rented through a combination of luck (they were desperate to move into the neighborhood to keep their kids in the same school district) and the fact that I thought a 3 generation family with 3 dogs was perfect for the house while most landlords thought it was too much (we'll see who is right).

With that said, I suspect you need to be targeting your marketing better--who can afford 3k a month and wants to rent (instead of buy) a single family home with four bedrooms in the suburbs.  And if you want to get 3k on the high end, what can you offer that the other folks are not.  I believe @James Hamling wrote a post once on this market expressing that he targeted recently divorced parents who would typically stay for 3-5 years while the divorce was finalized and their personal life stabilized but needed a home in their children's school district in the meantime.

Finally, assuming this is a median house (worth about 529k) your money is likely better put somewhere else than in this deal, because most folks where wouldn't buy a 529k house that rented for only 2800-3000$.

Greg Scott · Answer

You've actually got two problems here, not one.

The first is: Why is your house not renting?  Without an address or knowing much about your house, it appears you've priced it near the top of the market.   There are nice-looking 4/2.5s with much lower rent than you in West Plano.  (see screen shots) Most of the homes at $3,000 and above have more bedrooms or baths than yours.  If you want to get it rented fast, drop the asking rent to $2,800. You've already lost one month having it sit vacant, which means you've lost the equivalent of $250 per month on a 12-month lease. At $3,000 you may be waiting a long time for a renter.

The second issue was:  Lease vs Sell.  Honestly, you didn't give enough information.  Was this your primary residence before?  What kind of appreciation have you enjoyed?  There are numerous questions.  However, if you are not ready to be a landlord, you should sell.

Karan Kanekar · Answer

I am not getting good cash flow here at all.Mostly inclining towards selling now.Was planning to rent because with market volatility and interest rates thought there will be less buyers and very few options.

Karan Kanekar · Answer

This was an extremely great explanation,I am planning to sale/rent around 2800$ from now on whichever comes fast will take that route.That was really weird of that property company which was doing self showing wasted one month's rent.

Gina Stern · Answer

It all depends what your personal needs are. If you need passive cash flow then rent. If you want to purchase other flips then sell. It also depends if you live in an area where the rental market is strong versus if a sellers market is weak at the moment, only you can do those comps. Good luck!

Michael Sloan · Answer

Karan, nobody had asked yet. What is the goal you’re trying to achieve?

Its hard to cash flow a house like this in our market unless you have a lot of equity so you mortgage payment is really low.  Cash flow isn’t the only reason to hold rental properties though. (Tax benefits, appreciation, someone else paying your loan)

With your goal in mind, then ask if this property will get you there?   I hope it does.  If it doesn’t then you should sell and find something that will get you to your goal

Bruce Lynn · Answer

I think there are a few issues.  One is that I only see it on the MLS for 4 days now.  So maybe your PM was trying to double end it and not share your listing with the world?  You have to think if that is benefiting them or you?   What fee are they offering to other brokers to bring you a tenant?  While I don't have any stats, I think "self showings" are not beneficial to you.  I'd want an agent or PM that is personally going to show the property and make sure lights are turned off, thermostat is not adjusted, and doors are all locked up when people leave.  You don't get that with self showings.  You also don't get a chance to meet the tenants, address their concerns, encourage them to apply and leave a good lasting impression with them.You can put it up for rent and sale at the same time and see who comes first.  Unfortunately it appears that you bought at the very peak of the market, so rents and sales prices may not match what you paid.  You probably need to lower rent to be competitive.  I see brand new homes that are in great school districts around you like Frisco and Prosper for $3000-$3500 month.  So while the house is in a great location, it is a bit dated from what I can tell, so your pricing probably needs to match that.  Not many investors do this, but I say every time it is vacant you should put up for sale AND rent.  If you really want to rent, put the rent price competitive so you rent vs sale, and put the sales price up high enough that if someone buys it you are happy with the profit.  If you'd rather sell then rent, do the reverse.  Set the rent high enough you're happy if someone pays you big fat rent.

As an agent that works a fair number of leases I also don't like the alternative showing system.  I prefer it to be on broker bay, but showingtime is ok also.  Let's say I'm showing 5 properties today in West Plano 4 are on Broker Bay, but yours #5 is on some kind of alternative service I've never heard of before, and I have to stop and mess around uploading my ID and trying to figure out how I get access, it just starts everything on the wrong path initially.  This works in your agent's favor as they don't have to pay the fees for the showing services, but it doesn't work great for the agents who will bring you 90% of your great tenants.  I just believe in making things as frictionless as possible.  Start adding friction to the process and I think it costs you money.

I do like that you are allowing pets.  A quick survey in a class one day with PMs said 80% of renters now have pets.  Not sure if that is true or not, but seems legit.  So that will help you I expect.

The other thing I think you should do is think about if you want to be a rental property investor and if you do is this the house you would have targeted to buy and rent.  I'm guessing you bought it to live in and not to rent.  Don't be a forced landlord.  That's never good in my opinion.  If this was your personal residence sell it now so you don't potentially loose your capital gains exemption.  Check with your CPA this year when you file your taxes this year.  You may want to sell, even if that means taking a loss.  It happens and while no one feels great about that, it does happen and good to move on to a different option or investment.

Best wishes and good luck.

Dave Foster · Answer

@Karan Kanekar,  A lot of folks won't realize that the most attractive areas to live are also the most attractive areas to buy.  and your rental pool might be artificially low because everyone wants to buy in that area rather than rent.  That could be one reason.

If you find that the rental market wasn't what you anticipated and you choose to sell, you could qualify for a 1031 exchange  and defer all of the tax and depreciation recapture if there is any since you have purchased it.

This would allow you to use the tax to reinvest into another investment property and find something in an area with better potential.

If that property was once your primary residence (because of it's location) and you lived in the property for two out of the previous five years, you would also qualify for a 121 exclusion, and that would allow you to take the first $250K ($500K if married) of the gain tax-free.

Karan Kanekar · Answer

This is great example actually I have lived in that house for two years in past 5 years so no capital gain taxes for me only the realtor commision,looking for great optimal price that can sell the house in a month though?

Terrance Teague · Answer

Hey Karan!

Sounds like you've got a great property in a prime area of West Plano, and based on the location and school ratings, it should definitely lease this time of year.

A couple of thoughts:
First, how has your current property manager been marketing the home? Photos, listing description, social media, rental platforms, open houses, those details can make a big difference, especially in a market where renters have options.

Second, with a home like yours, 4 bed, 2.5 bath, 2,400 sq ft, it is a good house for families, especially with the schools and nearby amenities. If qualified applications have been limited, it might be worth revisiting the marketing strategy or rental price just slightly to improve your interest.

Hope this helps!

Need Advice! Rent or Sell My 2400 sq ft house in West Plano?

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