I have 2 years before I can sell house; what should I be doing?

[Gail W.]

Hi all! Me again!  Come seeking wiser minds than ours...

As some of you may remember, we became accidental landlords on a SFR in South OC (Ca) when we could no longer afford it (and the kids split). We went thru a couple of awful tenants, but now have a wonderful friend running his sober living biz there, very successfully (house is well maintained, neighbors love him). We just renewed his lease for 2 years. It nets us about $2k/mo.

A few house facts: 5 bedroom, 2 1/2 bath, 3 car. Kitchen just completely remodeled last year, new flooring thru out, new paint thru out (thanks to insurance from a slab leak). We then took out $70k more to do...New driveway. New AC/heat system. New salt water pool system. New fascia boards. New water friendly (fugly) landscaping. Expand concrete areas on side and back yards. Master bath semi-rehabbed (shower stall resurfaced, stock vanity w/ new granite top installed, pony wall removed, door added, new tile floor) Kids bath upstairs needs a tiny bit of updating, but nothing dated and awful. Could use some backyard shade as we had to tear down the palapa tiki bar (THANKS asshat neighbors!). Some may say tile roof needs updating, but there's nothing wrong with it. Side hill (it's on a corner lot) needs rethinking for vegetation; that water wise landscaping never took, so it's bare dirt with a few spindly weeds. VERY hard to grow stuff there. The retaining wall that runs around the front/side could use the top cap bricks replaced.  Total owed: $470k.  Current values are around $805k (according to Z). Folks around South OC are saying that's sure to go up in the next 2 years, but who really knows.

At the end of the next 2 years, when the lease is up, we want to sell. We want to use the proceeds to purchase a place in Arizona that we will eventually retire to. The Mr will retire in 5 to 10 years (he says 5, but I know him and think he'll drag it out to 10) The place in AZ is easily rented until we can get there.  We seriously want out of California.

Meanwhile, we rent a small farm for a very attractive price, and are HOPING to stay here for that 5-10 years. Obviously, I know this is written in stone, and if it changes, we would have to do some scrambling. But we do have a family compound down the lane that we can utilize if need be.

I know most will ask WHY would you sell. We're still trying to deal with that, really. The house has sh*tty memories for one; thanks neighbors!! We aren't great with money and are still paying off "bad decisions" from years back, so that $2k/mo income is spent almost before it hits the account. We have no savings, so nothing to fall back on. We have nothing to put back into the property after all we already did. We have tax issues too. We just feel under water half the time. So we thought if we sell and pay off EVERYTHING, we'd feel more comfortable. We no longer use credit cards or overspend; we are very careful now. If things change in the next 2 years, like we find we can save money because of a few different scenarios, then we MAY reconsider selling. But right now, we just want out.

SO. Our question is, what can we do, if anything, to improve the value of the house in the next 2 years? Remembering that we don't have much $$ to put into it. Are there any projects we should try to do that would increase it's value by a good measure? If there were something that would really boost the price, we'd find a way to do it. Or is that something we should wait to do until closer to selling?

THANKS!

[Chris T.]

@Gail W.

The issue is, you may not recover whatever additional improvements you put into your property. And no one can predict what will happen in the next 2 years. If you want top dollars and multiple offers, then you need to make it really nice, basically what you would see in a finished product by flippers.

So, what you can control are your current costs. 

Have you ask your tenant, (assuming he is qualified) if he is interested to buy your property at a fair market price? if you do sell it directly to your tenant, then you would have save 5-6% realtor fees. And it could be a win/win situation. (he saves on rent, loves being in your house and you sell your house asap without having to put more $$ in)

[Chinmay J.]

Originally posted by @Gail W.:

Hi all! Me again!  Come seeking wiser minds than ours...

As some of you may remember, we became accidental landlords on a SFR in South OC (Ca) when we could no longer afford it (and the kids split). We went thru a couple of awful tenants, but now have a wonderful friend running his sober living biz there, very successfully (house is well maintained, neighbors love him). We just renewed his lease for 2 years. It nets us about $2k/mo.

A few house facts: 5 bedroom, 2 1/2 bath, 3 car. Kitchen just completely remodeled last year, new flooring thru out, new paint thru out (thanks to insurance from a slab leak). We then took out $70k more to do...New driveway. New AC/heat system. New salt water pool system. New fascia boards. New water friendly (fugly) landscaping. Expand concrete areas on side and back yards. Master bath semi-rehabbed (shower stall resurfaced, stock vanity w/ new granite top installed, pony wall removed, door added, new tile floor) Kids bath upstairs needs a tiny bit of updating, but nothing dated and awful. Could use some backyard shade as we had to tear down the palapa tiki bar (THANKS asshat neighbors!). Some may say tile roof needs updating, but there's nothing wrong with it. Side hill (it's on a corner lot) needs rethinking for vegetation; that water wise landscaping never took, so it's bare dirt with a few spindly weeds. VERY hard to grow stuff there. The retaining wall that runs around the front/side could use the top cap bricks replaced.  Total owed: $470k.  Current values are around $805k (according to Z). Folks around South OC are saying that's sure to go up in the next 2 years, but who really knows.

At the end of the next 2 years, when the lease is up, we want to sell. We want to use the proceeds to purchase a place in Arizona that we will eventually retire to. The Mr will retire in 5 to 10 years (he says 5, but I know him and think he'll drag it out to 10) The place in AZ is easily rented until we can get there.  We seriously want out of California.

Meanwhile, we rent a small farm for a very attractive price, and are HOPING to stay here for that 5-10 years. Obviously, I know this is written in stone, and if it changes, we would have to do some scrambling. But we do have a family compound down the lane that we can utilize if need be.

I know most will ask WHY would you sell. We're still trying to deal with that, really. The house has sh*tty memories for one; thanks neighbors!! We aren't great with money and are still paying off "bad decisions" from years back, so that $2k/mo income is spent almost before it hits the account. We have no savings, so nothing to fall back on. We have nothing to put back into the property after all we already did. We have tax issues too. We just feel under water half the time. So we thought if we sell and pay off EVERYTHING, we'd feel more comfortable. We no longer use credit cards or overspend; we are very careful now. If things change in the next 2 years, like we find we can save money because of a few different scenarios, then we MAY reconsider selling. But right now, we just want out.

SO. Our question is, what can we do, if anything, to improve the value of the house in the next 2 years? Remembering that we don't have much $$ to put into it. Are there any projects we should try to do that would increase it's value by a good measure? If there were something that would really boost the price, we'd find a way to do it. Or is that something we should wait to do until closer to selling?

THANKS!

 Congratulations on getting out of the State of California. Horrible state. Horrible policies. Crazy liberals.. (Great weather though...).  

Anyway, back to answering our question. To get the best retail price, you need to make sure your house shows well. That's all you can do. Everything else is a product of location

[Gail W.]

Hmmm... wonder if they WOULD wanna buy it?? Good question! Couldn't hurt to ask.

If not, we'll just keep maintaining it and do fresh curb appeal right before selling. The tropical backyard always wows folks (you know how when you own it, all you see is the stuff you hate?? Ya. That's me and the yard.)

[Gail W.]

OK, the current renters can't buy it. But my realtor friend said she may have some investors that would. But I'm sure they aren't going to offer us anywhere close to what we need.

So I've been looking into getting a refi- to wrap up the HELOC into the 1st at a decent rate to save some money each month. But everyone's telling me they don't loan on a property I'm renting out. Or not until I can show 2 years of rental income. So NOW what?? This house is becoming a huge pain in the arse....