Edmond, OK · Member since 2012 · 456 posts · 270 votes
In 2005, I built a 2,370 sft single-family home in Waukesha, WI. My basis in the home then was $358,000.
I left Wisconsin in 2008, and have the home rented to the same family since then, who are glad to continue renting until I sell. They have never missed rent once in the last 7 years. My rent is set at $1500 per month, tenants take care of property management completely and send me receipt for any repairs. Repairs each year are less than $150, so tenants reciprocate a lower rent charge with good upkeep and low repairs.
I want to liquidate this home in Wisconsin and focus in my state (Oklahoma). But putting the property up for sale will drive away my tenants and their monthly rent check (I agree rent could be more but I will not gain much considering my annual income)
Thanks for reading, I appreciate any input to what you would do in my shoes.
Rental Property Investor · Boca Raton, FL · Member since 2014 · 1k+ posts · 713 votes
11y
@Jai Reddy Definitely a valid question. I don't know enough about the Milwaukee market to tell you how much you could get for the property... but being how Milwaukee is a desirable market for investors ever since @Dawn Anastasi and @Mehran K. teamed up and told the world on a podcast they were getting 2-3%, I would say you can sell the property without actually "putting the property up for sale". You can explain the situation to the tenants and explain that they would be getting a more attentive landlord that isn't focused in another state almost 1,000 miles away. I am sure they would understand.
Rental Property Investor · Boca Raton, FL · Member since 2014 · 1k+ posts · 713 votes
11y
@Jai Reddy Definitely a valid question. I don't know enough about the Milwaukee market to tell you how much you could get for the property... but being how Milwaukee is a desirable market for investors ever since @Dawn Anastasi and @Mehran K. teamed up and told the world on a podcast they were getting 2-3%, I would say you can sell the property without actually "putting the property up for sale". You can explain the situation to the tenants and explain that they would be getting a more attentive landlord that isn't focused in another state almost 1,000 miles away. I am sure they would understand.
I guess my first question is by liquidating the house, are you looking for a down payment with the proceeds for another property? Is there a option to refinance or pull out equity of this property for a down payment on another property in Oklahoma? It sounds like you have a great situation with your tenants and they have treated it well. If you can keep it in your portfolio, the long term benefits will pay off if you choose that route.
If your tenants are signed to a lease, you want to check with local housing laws, but they new owners may have to honor that lease until they find a new place. that would be giving them some peace of mind. However, it is a business and it sounds like the kind of people who would understand if you decided to sell. Perhaps they would be willing to buy from you? Have you thought about Rent to Own type situation?
@Dawn Anastasi is a good resource you may want to check with for PM ideas, and may be able to shed better light on laws for selling a property with tenants. GOod luck and hope everything works out for you!
Edmond, OK · Member since 2012 · 456 posts · 270 votes
11y
Douglass, to answer your question, yes, I would use proceeds to buy another property here in Oklahoma. I will look into a 1031 exchange in order to postpone paying capital gains since I had left that residence in 2008.
Current lease expires July 4th 2015, which is about 3 months away. Future owner will be free (according to my current lease agreement) to whatever he/she pleases after that.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
11y
@Jai Reddy I will agree with Ramon, Waukesha is not in Milwaukee and the price structures are very different. In Milwaukee you can pass the "2% test" or even the "3% test" but Waukesha properties cost more.
Edmond, OK · Member since 2012 · 456 posts · 270 votes
11y
Dawn, Jenkins, I think you hit the nail on my head, seems like Waukesha properties cost more and yeild less than 1% rent.
It doesn't seem like the best place to tie up my cash for given yeild. Renyometer says the rent of $1500 is on par with that market.
So, I would look to liquidate me before I renew with tenants again.
Can you assess what a sale price would be in that market today? 2340 sft, 3 bed, 2.5 bath. 35% hardwood floor, rest carpet and vinyl in bathrooms. Corona countertops.
I will have a real estate agent assess for a sale too.
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
11y
I would NOT recumbent using rentometer.
How much "equity" do you have in the house. You mention 358k basis. Is that what you paid for or how much liquidity you have. While 1500 seems very low for a property worth 358 (so call a couple of proerpty management offices and see what they think). It really depends on how much you have equity wise.
If you only have 20k you would be better off leaving it. Because by the time you sell your at 0.
We have alot of houses that while we could sell and make a profit we do SO much better leaving them as assets for our tenants to pay off. We self manage from across the country so it is possible to keep investing while leaving property in other states.