Investor · Wenatchee, WA · Member since 2013 · 6 posts · 1 vote
It's time to sell my rental in West Seattle in order to find something with more (any) cash flow. I'm about a year overdue on replacing the roof per the pre-purchase inspection recommendation, and it will need full removal and replacement due to max. number of layers already on it. It was pink when I bought it. I'm guessing I should paint it and replace the roof in order to sell it faster and/or for possibly a slightly higher price. Would you put the money and time into it if you owned it? Or would you sell it as is? I moved away from Seattle a couple of years ago so haven't paid much attention to how the market is doing.
The old roof is something they will catch at inspection but not usually something they will notice before offer (unless it is so bad that it's falling off). This means you will get full price offers but hit for it later.
But...buyers always try to hit you on something because buyers need to 'feel' like they got a good deal. I always leave one obvious thing to negotiate over so they don't get picky about stupid things... The roof is a good candidate.
I would paint it. Painting is one of the cheapest ways to fix up a home. It would give you a good return on investment considering that you increase the marketability of the home. A good neutral color exterior with a black shingled roof could be more marketable. If you don't have a lot of funds, and the roof isn't leaking then you may could hold off on the reshingle of the roof. Perhaps give a concession on the house to offset replacement of roof to the new buyer and they can reshingle when they need to. Sometimes estimations of roof replacement are not always accurate.
The old roof is something they will catch at inspection but not usually something they will notice before offer (unless it is so bad that it's falling off). This means you will get full price offers but hit for it later.
But...buyers always try to hit you on something because buyers need to 'feel' like they got a good deal. I always leave one obvious thing to negotiate over so they don't get picky about stupid things... The roof is a good candidate.
Thanks, guys! Great idea on using the roof as a bargaining chip. I imagine it will not be cheap to replace though since it's reached its limit of how many layers it can have and will involve more than just re-shingling. Two of the three realtors I've interviewed weren't concerned about the house color affecting the price. Still waiting on the opinion from the third. I guess we shall see.
Thanks, Heather! The previous owner was an eclectic poet. The mosaic work has seen better days because I do think it makes the pink and periwinkle a little more palatable. ha!
If it is in West Seattle, the color won't matter. The real estate market is hot and you will get top dollar regardless. Many buyers want to choose their own colors. Also, it may appeal to other poets and artists who feel the vibe. :-)
You mention your concern about cash flow on this property. I would analyze why it wasn't working for you before looking to buy elsewhere. Could you make this property more profitable for you if you kept it? Are there other reasons you want to sell, such as your change in location, better market potential? If you bought the property long ago, it would be worth a mint now. Cash in on the appreciation and 1031 exchange it into a place in the Wenatchee area. You will definitely get more for your money in your new locale and a rental property will be easier to self-manage if it is close to your home.
Hi Marcia! I thoroughly enjoyed your podcast and have been meaning to connect with you. I bought the house in May 2010 to live in forever and then met the love of my life 7 months later. Isn't that how it always happens? I moved to Wenatchee in September of 2012 so this September will be the end of the 2 of 5 yrs. use test or whatever it's called for capital gain taxes. I'm losing money on it because I've been under-renting it (rookie move) at $1400. I see now via Craiglist that I could get $1800 a month, which would mean $250-300 cash flow each month. My renters up and signed a new lease elsewhere when I told them I needed to sell it by September 30, so I could actually re-rent it for March 1 at the higher rent.
Depending on what the realtors come back with for a realistic sales price (and what we estimate to net from it), we may choose to hang onto it for a few more years and then do a 1031. With good renters, the distance between Wenatchee and West Seattle shouldn't matter much. The thing is that we could fairly easily buy a 4-plex in Wenatchee for the equity I have in this little pink house. The 4-plex we currently own (in East Wenatchee) cash flows nicely for us. We're also working toward building a duplex on land we already own so we could use the equity from this house to fund that and have a small mortgage or even no mortgage.
Ack, so many options and I struggle with the confidence in myself to make the right decisions. I know that will come with time; real estate investing is fairly new to me.
I don't think I would do anything, if the roof doesn't leak or pose immediate issues. The market is tight in West Seattle and buyers will likely take it all into account.
Talk to your realtor. Some sellers in Seattle are demanding pre-inspections. Not sure if West Seattle is hot enough to support that tactic.
Also, I agree you could get more rent than that for a SFR in West Seattle. 2 bedrooms in complexes draw more than what you are currently charging.
You might consider taking out a HELOC to pull out equity. I did this on a rental I own on Vashon and could go up to 70% total LTV. Well done buying in 2010. I'll bet you've built up equity.
Also, the pink paint fits right in at West Seattle :-).